ROH buy-back dispute remains unresolved after 30-day period
ONEAM limits comment after a 30-day period ended on August 16, while GROREIT seeks more time to repay a 1.35-billion-baht Government Savings Bank loan.
The 4.873-billion-baht property dispute involving Grande Royal Orchid Hospitality Real Estate Investment Trust with Buy-Back Condition (GROREIT) remains unresolved after a 30-day compliance period was reported to have ended on August 16.
One Asset Management Limited (ONEAM), the REIT manager, is limiting further public comment while management reviews the outstanding issues and considers the next steps needed to protect unitholders.
The dispute arose after Royal Orchid Hotel (Thailand) Public Company Limited (ROH), the former owner of the Royal Orchid Sheraton Hotel and Towers, failed to complete the agreed buy-back and take transfer of the property on July 14.
Under the sale and purchase agreement, ROH was required to pay GROREIT 4.873 billion baht, excluding value-added tax, while the trust was to transfer ownership and possession of the property simultaneously. ONEAM informed the Stock Exchange of Thailand that ROH did not complete the transaction at the relevant land office on the contractual due date.
Following the failed transaction, MFC Asset Management Public Company Limited, acting as GROREIT’s trustee, was to notify ROH that it must comply with its obligations under the sale and purchase agreement, the lease agreement and other related arrangements within 30 days of the notice.
The 30-day period should not be treated as an extension of ROH’s contractual buy-back right. In a subsequent SET disclosure, ONEAM and MFC maintained that the buy-back right had already expired after no payment was presented on July 14.
ONEAM limits disclosure while review continues
Alongkorn Prathanrasnikorn, Chief Property and Trust Officer at ONEAM, described the GROREIT case as an unusual situation requiring careful examination before further details could be released.
He explained that management was taking a cautious approach to communications with unitholders and was not providing additional information to the media while material issues remained under consideration.
Disclosing incomplete information could cause concern among unitholders or lead to differing interpretations, potentially triggering panic in the market, he noted.
ONEAM maintained that it had not neglected the situation and was proceeding carefully to protect unitholders’ interests. The trust has responded to enquiries with information that can currently be disclosed.
Alongkorn assessed that unitholders continued to have confidence because GROREIT still held an underlying property with a clearly identifiable value. His official English name and title are recorded in GROREIT’s SET disclosures.
No formal press conference had been scheduled for the week of August 17 because management was still awaiting clarity on the outstanding matters. ONEAM plans to inform the media and unitholders when further information can be released.
GSB considers 1.35-billion-baht loan request
GROREIT has also asked Government Savings Bank (GSB) to extend the repayment period on a 1.35-billion-baht credit facility and waive compliance with certain conditions under the loan agreement.
The trust used the loan to invest in the Royal Orchid Sheraton Hotel and Towers property. The facility was originally due for repayment on July 14, the same date on which ROH was required to complete the property buy-back.
ONEAM’s July 14 SET disclosure outlined plans to ask GSB for a repayment extension, waivers of certain covenant requirements and the bank’s consent regarding the financing arrangements after ROH failed to complete the transaction.
Government Savings Bank is considering the application. GROREIT will notify unitholders when further progress can be disclosed.
Source: Bangkokbiznews
