On March 26, Quarz Capital Asia along with the internalisation committee which largely comprises Quarz, requisitioned for a third EGM for Sabana Industrial REIT, this time with seven resolutions focused on the Trust Deed “amendment issue”.
Separately or coincidentally, Quarz and its committee appear to have declined to sign up to the terms of reference including not making certain ad-hoc announcements without notifying the Trustee, and curbs in trading in Sabana REIT units.
On March 26, Sabana REIT’s manager said “As the Trustee has been directed by unitholders to effect the internalisation exercise, the Manager will be discussing with the Trustee on their next steps”. The Trustee refers to HSBC Institutional Trust Services which on August 7, 2023 was directed by unitholders to “effect the internalisation” in an EGM requisitioned by Quarz Capital Asia.
Quarz Capital Asia is attempting to direct the Trustee to change Sabana REIT’s Trust Deed to enable its unitholders to own an operating company, among other changes, without having to go through an EGM and an extraordinary resolution.
As it happened, the Trustee made an announcement on March 26. On March 8, a second EGM had been requisitioned by Quarz Capital Asia to vote on 10 ordinary resolutions. Among them, resolution 3 was for the Trustee to establish this so-called “internalisation committee”. The Trustee and the committee were scheduled to meet on March 25, but the meeting did not take place. when the Trustee was informed by email (on March 25) that the Quarz-led committee would not be attending.
“The Trustee understands that the internalisation committee did not attend the meeting because [it] wished to focus discussions on the proposed Trust Deed amendments and the Order 32 Application,” the Trustee’s announcement said. A decision by the Court on the Order 32 Application will provide clarity to all unitholders, the Trustee adds.
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Based on the terms of reference in the announcement, the internalisation committee has to comply with certain regulations and laws based on the Trust Deed, the Securities and Futures Act, and so on.
Hence the committee members are required to sign a non-disclosure agreement (NDA) to safeguard confidential information.
Among the requirements, based on certain regulations, the committee would not be able to "make any announcement or public statement to the SGX-ST or other authorities or to the media or otherwise (announcements) concerning the Internalisation Implementation or outside the scope of its functions without the prior written approval of the Trustee”.
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On occasion, Quarz Capital Asia has made distribution per unit (DPU) forecasts based on certain assumptions such as savings from internalisation.
In the event the committee (acting individually or collectively or in any other capacity) intends to make any announcement in connection with or relating to the Internalisation Process, the committee has to consult the Trustee, the terms of reference state.
It appears that the committee needs to notify the Trustee no later than five business days before any announcement is made and give the Trustee a reasonable opportunity to comment on the contents.
In addition, the internalisation committee may be restricted in the trading of Sabana REIT units. The confidential information provided to the committee maybe of a non-public or price sensitive nature (MNPI). MNPI not otherwise covered by a confidentiality agreement cannot be shared with Committee members, and in the absence of any appropriate confidentiality agreement, committee members will only receive publicly available information.
