First REIT has proposed to undertake a rights issue as the healthcare REIT faces a “significant refinancing hurdle” related to its short- and long-term financial obligations.
The REIT has about 80.2% or about $395.7 million of debt due within the next 18 months.
About 40% or $196.6 million is due on March 1, 2021.
First REIT intends to issue 791.1 million units at an indicative price of 20 cents apiece to raise about $158.2 million in gross proceeds.
This will be issued on a renounceable basis to eligible unitholders and on a pro rata basis of 98 rights units for every 100 existing units held.
In support of First REIT and the proposed rights issue, First REIT Management and OUE Lippo Healthcare (OUELH) have provided irrevocable undertakings.
SEE: First REIT 3Q DPU falls 53% to 1.01 cents on enlarged unit base
First REIT Management is the REIT manager of First REIT, while OUELH owns a 10.6% stake in First REIT.
First REIT says it will convene an extraordinary general meeting (EGM) on Jan 19, 2021 to seek unitholder approval on a resolution necessary for the proposed rights issue to proceed.
First REIT adds that the proposed rights issue is "critical".
“If the proposed rights issue does not proceed, First REIT will be faced with a critical need to re-evaluate other funding options to avoid going into financing default,” it says in a Dec 28 statement.
As at 10.12 am, First REIT was down 11 cents or 27.2% at 29.5 cents with 21.7 million units changed hands.