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The Queen Mary in Long Beach, CA is among EHT assets
The challenges of a Singapore-listed hotel trust went from financial troubles to arrests this week, as six current and former directors of the Eagle Hospitality Trust were recruited as part of a deeper investigation into their failures to make the necessary disclosures to the investors.
All six, including CEO Salvatore Takoushian, have been released on bail after being arrested on October 1 “on reasonable suspicion that Section 203, read with Section 331 of the Securities and Futures Act (Chapter 289) Singapore, may have been raped, “according to a statement to the Singapore Stock Exchange on October 2.
Section 203 of the Securities and Futures Act addresses the responsibilities of corporate officers to make the necessary disclosures to the Exchange.
Section 331, which is part of a chapter dealing with the duty not to make false statements to the exchange, details the consequences for corporate officials if the entity they represent is found to have committed a crime intentionally.
No charges filed
Eagle Hospitality Trust, which does list 18 US hotel properties on the SGX, had first acknowledged in June that it was being investigated by the Monetary Authority of Singapore and the Singapore Police Department of Business Affairs. Then, in August this year, KPMG, serving as EHT auditors, refused to certify REIT’s books.
In March, the trust had defaulted on a $ 341 million credit line.
CEO and CEO Salvatore Takoushian was among those arrested
The trust said in its latest statement that Lau Chun Wah, Kelvin Tan Wee Peng, Tarun Kataria, Salvatore G. Takoushian, Carl Gabriel Florian Stubbe and Ng Kheng Choo were arrested Thursday as the government continues to intensify its investigation into the insolvency. trust. Of those names, Lau, Tan, Kataria and Takoushian continue to serve on the EHT board, according to its website.
“EHT further understands that the investigations are still ongoing,” the trust manager said in a statement to SGX, adding that “none of the persons mentioned above have been charged with any crime nor do the arrests necessarily mean there will be charges.” .
The manager said that together with his directors he is cooperating fully with the authorities in the investigation and indicated that he will provide updates when possible.
The trust administrator has not made any changes to the directors on the board of directors representing the shareholders of the two stapled securities that make up EHT since Carl Gabriel Florian Stubbe was removed from office on August 30. The announcement indicated that all current directors will continue in their positions.
Trust Manager seizes hotels
Comprised of a staple group from Eagle Hospitality Real Estate Investment Trust (EH-Reit) and Eagle Hospitality Business Trust (EH-BT), EHT had reported a loss of $ 38.9 million for the second quarter and has seen relationships between the USA Sponsor and Singapore managers have been in litigation in recent months.
On September 16, the trust administrator had served “pay / make or give up” legal notices to the principal tenants in arrears who had properties in the trust, demanding that they pay the overdue rent or fulfill other obligations, or surrender the properties. .
Then, on September 23, citing repeated defaults on rent payments, the manager followed up by issuing termination notices to principal tenants for the 18 properties in the trust, and that termination took effect 10 days later.
Of the 18 hotels, including the Queen Mary luxury liner docked in Long Beach, California, only three remain in operation, and in his notice that he was taking direct possession of the properties, the trust manager noted that the seizure “may they do not necessarily lead to successful rehabilitation of EHT ”.
Mysterious loans
While the seizure of the hotels gives the trust manager direct control over EHT’s assets, the manager’s directors are now in the crosshairs of the Monetary Authority and the Singapore police, judging by last week’s arrests.
The Singapore authorities have yet to disclose the results of their investigations or indicate what information EHT directors may not have disclosed. However, in August, the trustee, along with the trustee, said that their advisors had told them that, in May, one of the trust’s master lessors had applied for and received a loan of more than $ 2 million through a signed application. by a former officer. from sponsor, Urban Commons.
In an August 14 report, EHT auditors at KPMG indicated that, among other issues, they were unable to clarify the nature of an $ 89 million unsecured loan to the trust, and these issues prevented them from signing the 2019 trust books. .
After the trust was listed on SGX through an initial public offering in May 2019, by June of this year, the cities of Pasadena and Long Beach in California, which are home to EHT properties, took separate legal action against the companies that own property in the trust portfolio, and creditors also placed liens on the REIT’s assets.
