Ascendas Hospitality cuts asset from Singapore IPO, say sources

July 18, 2012

HONG KONG, July 18 — Ascendas Hospitality Business Trust has dropped a South Korean asset from its portfolio, prompting the company to cut the size of its planned Singapore initial public offering (IPO), the latest blow to already fragile sentiment for new listings in Asia.

The move is unusual because it will reduce the number of units being sold in the IPO, which was priced last week at SUS$0.88 per unit, the bottom of an indicative range of SUS$0.88 to SUS$0.94. The trust's original plan was to raise about US$350 million with the sale of 506.1 million units..

Fewer proceeds from the offer would limit Ascendas Hospitality's ability to purchase properties and repay debt. The company will file a revised prospectus as soon as Wednesday, sources with direct knowledge of the deal said.

The sources were not authorised to speak publicly on the matter.

"I can't think of a single example like that," said an investment banker not involved in the deal. "That is very messy."

The South Korean property, a five-star business hotel called the Pullman Ambassador Changwon, accounted for 10 per cent of the value of the trust, according to Ascendas Hospitality's preliminary prospectus dated July 9.

It is not clear why the asset has been removed from the trust. Ascendas Hospitality said in its initial prospectus the vendor of the South Korean hotel, Dosiwasaram Co Ltd, had obtained consent from some of its creditors to sell the property, but there was no guarantee all consents had been secured.

Ascendas' external public relations representatives declined to comment.

Minus the South Korean asset, the business trust comprises 11 hotel properties with about 3,800 rooms. Seven of the hotels are in Australia, accounting for 60 per cent of the value of the trust, with one hotel in Japan making up 22 per cent of the trust. Two hotels in China make up another 8 per cent.

Nomura and Standard Chartered are joint global coordinators for the offering with HSBC and DBS acting as joint bookrunners. Nomura and Standard Chartered officials declined to comment on the IPO. — Reuters