Equitativa (Dubai) Limited, manager of Emirates REIT (CEIC) PLC said Tuesday that the large majority of Sukuk holder's that have voted were in support of the company's exchange offer of its Shariah compliant bonds due in December 2022 and encouraged all certificate holders to vote by June 7. As of May 26, close to 60% of the Sukuk holders had cast their vote, with more than 75% of those votes in favor of the Consent Solicitation Memorandum (CSM) presented. The CSM is a voluntarily proposed transaction that is designed to provide Sukuk holders with the opportunity to exchange an unsecured Sukuk for a new secured Sukuk on a dollar-for-dollar basis. The company is providing all available security to the Sukuk holders as part of this exchange. The company has also proposed to maintain the existing 5.125% profit rate for the new secured Sukuk. While a minority Sukuk holder group has been formed, the company does not believe it is reflective of the Sukuk holder group as a whole, many of which have already voted in favor of the offer. In addition, the board rejects the minority group's demand for Emirates REIT to pay for their legal and financial advisory fees, services, which the group independently sought. Arun Reddy, managing director at investment bank Houlihan Lokey, an advisor to Emirates REIT said: "We regard the proposal put forward to certificate holders as a very straightforward and voluntary amend and extend transaction which has been fairly and explicitly designed with the interests of Sukuk holders in mind. "The fact that the Sukuk has rallied 8 basis points, or 12%, to 70 pts (as of May 27, 2021) vs 62 pts (as of May 17, 2021) since we tabled our proposal shows the market is both supportive and positive on the transaction." Reddy added, "While we welcome the minority Sukuk group's participation in the offer, to date it has not yet provided any detailed or 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." In a report published last week, ratings firm Fitch confirmed that Emirates REIT maintains sufficient liquidity to meet its June 2021 Sukuk profit distribution, if required. Further to this, Emirates REIT confirms its liquidity position is adequate to meet the upcoming Sukuk profit payment. The company also believes that the minority Sukuk holder group is potentially misleading the general body of the Sukuk holders by referring to the language in the CSM relating to waiver of past defaults. The company again confirms that there is no event of default or dissolution event. The proposed waiver language is customary language in an exercise of this nature, to ensure that the new certificates are issued without the risk of any perceived event of default under the old certificates. The old certificates will in any event be extinguished once the new certificates are issued. Emirates REIT encourages all Sukuk holders to vote by early next week. Consent Solicitation for Sukuk holders remains open until June 7. Consenting Sukuk holders will benefit from a 50bps consent fee if their confirmation of the voluntary deal is received by the deadline. — SG
