Ad-Hoc Group disappointed that Emirates REIT’s latest statement ignores specific concerns and continuing lack of support for Consent Solicitation from majority

24
  • Emirates REIT continues to flout its Certificateholders by failing to engage in good faith, transparent and constructive dialogue despite numerous invitations from the Ad-Hoc Group.
  • Voting data, provided in the latest statement from Emirates REIT, continues to suggest that, as of 26 May, a majority of investors (55%) were against the Consent Solicitation or had not voted, challenging Emirates REIT’s assertions of support, especially given the deal is structured to incentivize early voting. 
  • As reiterated by the downgrade by Fitch to a ‘C’ rating and the Fitch statement that the Company’s proposal results in a “material reduction in terms for lenders”, the Ad-Hoc Group believes that Certificateholders are unfairly bearing the entire downside burden.
  • The Ad-Hoc Group has articulated in its letter of 26th May to the Company, detailed and specific amendments to the transaction that will benefit the long-term growth of the Company and both its debt and equity shareholders as a whole. The Ad-Hoc Group is disappointed that the Company has chosen not to acknowledge this. 

Dubai: Further to the statement issued by Equitativa (Dubai) Limited (“Equitativa”), manager of Emirates REIT (CEIC) PLC (“Emirates REIT” or the “Company” or the “REIT”) on Tuesday 1 June 2021, the ad-hoc group of 11 institutional Certificateholders in Emirates REIT Sukuk Limited (the “Ad-Hoc Group”) reiterates that it has yet to receive any response or resolution to the numerous and specific areas of concern it has outlined to Emirates REIT.

It is disappointed that Emirates REIT has failed to engage in constructive dialogue and has instead chosen to ignore the Ad-Hoc Group’s good faith requests for information and discussion, which would support transparent negotiations regarding the transaction to the benefit of all Certificateholders and the long term benefit of the Company’s shareholders. 

In particular, the Ad-Hoc Group has articulated its concerns regarding: 

  • Lack of transparency on (i) the operational, financial and liquidity position of the Company; (ii) ongoing breaches to transaction documents; (iii) ongoing litigation; (iv) regulatory investigations; (v) related party transactions; and (vi) valuation. 
  • Cash leakages via excessive management fees and operating costs. 
  • Legacy governance issues at the Company, which remain unaddressed. 
  • Inadequate downside protection for the Certificateholders, particularly in respect to security.
  • Unfair burden sharing and inadequate economics for the material risks that the Certificateholders bear.

Furthermore, the voting data reiterated in the latest statement from Emirates REIT continues to suggest that as of 26 May (date of last data provided), the majority of Certificateholders were against or had not voted on the Consent Solicitation. Given that the deal is structured to incentivise early voting, this indicates the lack of support for the Consent Solicitation in its current form. The Ad-Hoc Group would welcome the provision of up-to-date voting data in the interests of full transparency.

The specific wording in the Consent Solicitation relating to the waiver of all past or subsisting breaches or defaults (howsoever described), it is entirely reasonable under the circumstances for Certificateholders to request for details and further information of any breaches and defaults for which waivers are requested. This request remains unanswered.  

The Ad-Hoc Group also believes that the restructuring terms should reflect the increased downside risk that Certificateholders are being asked to bear and that Equitativa, as the manager of the REIT, should share in that burden by offering a management fee reduction. 

Finally, the Ad-Hoc Group reiterates its clearly stated aim of seeking to engage with Emirates REIT to allow for renegotiated and improved terms to the benefit of all Certificateholders and which will enable the REIT to deliver long-term growth underpinned by strong financial and corporate governance foundations.

In order to enable a renegotiation of the Consent Solicitation, it therefore urges all Certificateholders to examine the information available alongside the specific concerns the Ad-Hoc Group has repeatedly articulated before exercising their final voting rights ahead of the voting deadline of 7th June.