S’pore-listed Eagle Hospitality Trust CEO seeks to contest four disclosure-related criminal charges
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Salvatore Takoushian was CEO of Eagle Hospitality Trust, which was suspended from trading in March 2020.
PHOTO: SALVATORE G. TAKOUSHIAN/LINKEDIN
Uma Devi
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SINGAPORE - Salvatore Takoushian, chief executive officer of Singapore-listed Eagle Hospitality Trust (EHT), is looking to contest four criminal charges under the Securities and Futures Act over consenting to EHT’s “reckless” non-disclosure of information that was necessary to avoid the establishment of a false market.
At the State Courts on May 17, the 43-year-old American told the judge he intends to plead “not guilty” to the charges. He also said he intends to engage a lawyer.
The Monetary Authority of Singapore (MAS) on May 17 said that Takoushian, if convicted, faces a fine of up to $250,000 or imprisonment for a term of up to seven years on each charge.
EHT is a stapled trust comprising Eagle Hospitality Real Estate Investment Trust (EH-Reit) and Eagle Hospitality Business Trust (EH-BT). The trust listed on the Singapore Exchange (SGX) in May 2019, but tanked upon its debut and was suspended from trading in March 2020.
The case marked one of the fastest collapses of a Singapore-listed company, and was a key case that rocked investor confidence in the market.
Investigations over the course of liquidation proceedings also unravelled several lapses in governance, leadership and financial difficulties that were not disclosed to investors at the time of listing.
A number of EHT’s units filed for Chapter 11 bankruptcy protection in the US in January 2021, and later filed a plan for liquidation.
Bank lenders were slated then to mop up a bulk of the proceeds, while stapled security holders were left empty-handed.
Charge sheets seen by The Business Times described Takoushian as a “responsible person” for EH-Reit and Eagle Hospitality Business Trust Management, which was the manager of EH-BT.
The charge sheets said that on June 7, 2019, Takoushian, as chief executive and executive director of the trust, consented to the “reckless nature” of the trust’s managers to notify SGX about information that was required to be disclosed under listing rules.
Such information included the fact that the master lessees under the master lease agreements for the properties in EHT’s portfolio had failed to provide standby letters of credit amounting to US$20 million (S$26.9 million) by June 7, 2019.
This amount was the balance of security deposits amounting to US$43.65 million owed to EH-Reit. The failure to provide the security deposits resulted in defaults under the master lease agreements, the charge sheets said.
The defaults under the master lease agreements thereby resulted in defaults under the US$341 million facilities agreement dated May 16, 2019.
The agreement was between DBS Trustee in its capacity as trustee of EH-Reit, Eagle Hospitality Business Trust Management and a syndicate of other lenders, among other parties.
The other charges levelled against Takoushian pertained to EH-Reit Management’s submission of a notice to the master lessees to notify them of their failure to provide the security deposits that were required under the master lease agreements, and EH-Reit Management’s agreement to the master lessees’ request for a 60-day extension of the 180-day cure period to provide the security deposits. This period would have otherwise expired on Dec 21, 2019.
On Feb 14, 2020, EH-Reit Management had again agreed to the master lessees’ request for a further extension to Jun 8, 2020, to provide the security deposits.
MAS said this information was necessary for the trust to disclose, to avoid the establishment of a false market in EHT’s securities, and was required to be disclosed under a portion of the SGX mainboard’s listing rules.
In failing to do so, Takoushian committed offences under certain sections of the Securities and Futures Act.
He is out on a bail of $40,000. His pre-trial conference will be held on June 14.
Takoushian is part of an investigation jointly conducted by MAS and the Commercial Affairs Department. MAS said the investigations against the other former directors of EHT’s managers are ongoing. THE BUSINESS TIMES
