LIPPO Malls Indonesia Retail Trust (LMIRT) : D5IU 0%will not pay distribution on its S$140 million tranche of 7 per cent perpetual securities on Mar 27, the manager for the trust said in a regulatory filing on Wednesday (Mar 13).

 

LMIRT Management said Perpetual (Asia), in its capacity as trustee for LMIRT, has decided against paying distribution on the perpetual securities issued in September 2016.

 

&ldquo Accordingly, the issuer has no obligation to pay the March 2024 distribution, and the unpaid March 2024 distribution is non-cumulative and does not accrue distribution,&rdquo the filing said.

 

Consequently, it is not allowed to declare or pay any dividends, distributions or make any other payment on LMIRT units or (except on a pro rata basis) the S$120 million perpetual securities it issued in June 2017.

 

LMIRT cannot redeem, reduce or buy back any of the units or (except on a pro rata basis) any of the 2017 perpetual securities.

 

It can only make dividend, distribution or other payment on its units or the 2017 perpetual securities or redeem that issuance if it has satisfied some requirements, including having redeemed all the outstanding perpetual securities.

 

LMIRT units were unchanged at S$0.013 &ndash its 52-week low &ndash on Wednesday, before the non-payment of distribution on the 2016 perpetual securities was announced.

 

FITCH Ratings has upgraded the long-term issuer default rating of Lippo Malls Indonesia Retail Trust : D5IU +6.25% (LMIRT) to &ldquo CC&rdquo from &ldquo C&rdquo , after having downgraded it to &ldquo C&rdquo from &ldquo CC&rdquo earlier this month.

 

The &ldquo CC&rdquo rating reflects the credit rating agency&rsquo s view that LMIRT is unlikely to raise sufficient funding to repay the remaining US$138.4 million of unsecured notes maturing on Jun 19 at par value, said Fitch in a report on Wednesday (Jan 31).

 

The previous downgrade to &ldquo C&rdquo on Jan 26 followed the announcement by the real estate investment trust (Reit) the day before that the tender offer for its senior unsecured notes due in 2024 and 2026 would proceed.

 

Fitch said in its report then that such a tender offer constituted a distressed debt exchange, as the transaction would lead to a material reduction in the original terms of the notes.

 

Fitch has also upgraded the rating on LMIRT&rsquo s senior unsecured notes due 2024 and 2026 to &ldquo CC&rdquo , from &ldquo C&rdquo , with the recovery rating remaining at &ldquo RR4&rdquo .

 

The &ldquo RR4&rdquo rated securities have characteristics consistent with securities historically recovering 31 to 50 per cent of current principal and related interest, said Fitch.

 

Earlier on Wednesday, LMIRT announced that it had inked a cooperation agreement valued at 254 billion rupiah (S$21.6 million) for the Reit&rsquo s subsidiary to extend its right to operate Cibubur Junction, a Jakarta shopping mall, until Jun 29, 2045.

 

The &ldquo CC&rdquo rating, indicating high levels of credit risk, also shows that Fitch expects the Singapore-listed trust to be unlikely to raise sufficient funding to repay the remaining US$188.3 million of unsecured notes maturing on Jun 19, 2024, at par value.

 

FITCH Ratings has upgraded Lippo Malls Indonesia Retail Trust&rsquo s (LMIRT) long-term issuer default rating to &ldquo CC&rdquo from &ldquo RD&rdquo , after downgrading it to &ldquo RD&rdquo from &ldquo C&rdquo after the completion of a tender offer.

 

The &ldquo CC&rdquo rating, indicating high levels of credit risk, is to reflect the increasing likelihood of a debt restructuring, given the low take-up rate of the tender offer, said Fitch in a report on Friday (Jan 5).

 

It also shows that Fitch expects the Singapore-listed trust to be unlikely to raise sufficient funding to repay the remaining US$188.3 million of unsecured notes maturing on Jun 19, 2024, at par value

 

Fitch added that the previous downgrade to &ldquo RD&rdquo , or restricted default, was because the tender offer was seen as a distress debt exchange, as it results in a material reduction in terms and was conducted to avoid a default.

 

Fitch has also upgraded the rating on LMIRT&rsquo s senior unsecured notes due 2024 and 2026 to &ldquo CC&rdquo , from &ldquo C&rdquo , with a recovery rating of &ldquo RR4&rdquo , indicating average recovery prospects given default.

 

The &ldquo RR4&rdquo rated securities have characteristics consistent with securities historically recovering 31 to 50 per cent of current principal and related interest, according to Fitch.

 

Fitch highlighted LMIRT&rsquo s liquidity concerns, led by the high execution risks around its ability to pledge some of its unencumbered assets, and dispose of non-core assets in the near term, in addition to its insufficient cash balance of S$99 million as at the end of September last year.

 

After the market closed on Thursday, LMIRT&rsquo s manager noted that the trust&rsquo s aggregate leverage ratio is likely to have risen to 44.3 per cent for the fourth quarter of 2023, from 43 per cent in the previous quarter, primarily driven by a 7.7 per cent decline in the trust&rsquo s investment properties&rsquo value.

 

The manager also noted that the trust&rsquo s debt obligations fell to around S$19.5 million after the completion of the tender offers in December last year.

 

FITCH Ratings has downgraded Lippo Malls Indonesia Retail Trust&rsquo s (LMIRT) long-term issuer default rating to &ldquo C&rdquo from &ldquo CCC-&rdquo .

 

The move comes after the trust announced on Dec 27 that a tender offer for its senior unsecured notes due 2024 and 2026 would proceed after receiving the relevant requisite consents.

 

Fitch, in a report dated Dec 29, believes such a tender offer constitutes a distressed debt exchange as it will lead to a material reduction in the original terms of the notes. Furthermore, the tender offer is being conducted to avoid a traditional default.

 

It previously warned of a downgrade on Dec 14 after placing the Indonesia-focused real estate investment trust on its &ldquo rating watch negative&rdquo list.

 

Based on Fitch&rsquo s ratings scales, a lower &ldquo C&rdquo rating points to a near default &ndash where a default, or default-like process, has begun.

 

LMIRT&rsquo s manager on Tuesday (Jan 2) highlighted in a bourse filing that the trust remains in compliance with its financial covenants.

 

On Dec 11, LMIRT launched tender offers related to its outstanding 7.25 per cent senior notes due 2024, and 7.5 per cent senior notes due 2026. The trust proposed to repurchase its 2024 notes at US$765 per US$1,000, and the 2026 notes at US$665 per US$1,000 via a fixed-price offer.

 

It also launched consent solicitation exercises related to proposed amendments to indentures of the notes, which prevent LMIRT from pledging its assets as security for debt financing.