News Detail

Date/Time
29 May 2019 19:27:00
Headline
Notification of the resolution of the Investment Committee on the lease agreement of Patong Heritage Hotel Project of MFC Patong Heritage Property Fund (M-PAT)
Symbol
M-PAT
Source
M-PAT
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                Reference is made to that MFC Asset Management Company Limited ("the Management 
Company"), on behalf of the management company of MFC Patong Heritage Property
Fund ("the Fund") has disclosed the notification of Record Date for determining
the right of unitholders for attending the Extraordinary General Meeting
No.1/2019 (Revised no.2) and the Management Company are waiting for lease
proposal as detail in reference. Currently, the Fund receives lease proposal
from Patong Heritage Co.,Ltd. ("Patong Heritage") as the lessee of Patong
Heritage Hotel ("the Property") and also be reaffirmed from other prospect
lessee to lease the property. Therefore, the Investment Committee considered and
recognized the necessary to enter lease agreement in order to protect benefit
of unitholders. In this respect, the Investment Committee held the meeting on 29
May 2019 to consider and approve the lease agreement and other relevant matters
in relation to Agenda 3 of the Extraordinary General Meeting No.1/2019 hold on
July 4, 2019 as follows:

1.    Resolved to propose to the unitholders meeting to consider and approve the 
new lease proposal for Patong Heritage Hotel Project
Background
Reference to Lease Agreement for Patong Heritage Hotel Project which is made 
between MFC Asset Management Plc. on behalf of MFC Patong Heritage Property Fund
and Patong Heritage Co.,Ltd dated June 11, 2014 ("the Lease Agreement") will
end on June 10,2019. As stipulated in the Lease Agreement, Patong Heritage has
given commitment to renew the agreement for every period of 3 years with
required mutually agreed on a new rental rate for renewal of the lease
agreement.


Implementation
In this regard, the Fund has proposed new rate for the renewal of the Lease 
Agreement to Patong Heritage. Patong Heritge has acknowledged the intention of
the Fund but didn't accept the new rate. Later on, Patong Heritage has proposed
back its new rental rate and other conditions to the Fund but until now, Patong
Heritage and the Fund still cannot mutually agree on the new rental rate.
For the consideration of the other possible alternatives, the Fund has taken the
process of seeking a new lease. Therefore the Fund appointed property agent to
find new lease and analyze other possible alternatives for the best benefit of
the unitholders. Until now, there is a few potential new lessees propose term
and conditions of new lease agreement to the Fund.
Proposal of Lease of Patong Heritage Hotel Project from new lessee
With regard of the Lease proposal together with terms and conditions based on 
which a new lease agreement will be prepared, there are 4 proposals submitted to
 Management Company.
Opinion
Taking the advantage and disadvantages for selecting new proposal to lease 
Patong Heritage Hotel Project. It has opined that it is suitable to propose
Proposal C to the unitholder's meeting to lease Patong Heritage Hotel Project
because in doing so the risk from fluctuated of actual performance will be
mitigated as well as the risks arising from any renewal of the agreement will be
eliminated. Additionally, Proposal C offers a better security in terms of
lessee's credibility considering that the proposer is an entity listed on the
stock exchange of Thailand. Although the mentioned proposal is subjected to due
diligence which could lead to amendment of conditions within the proposal. The
fund shall with the unitholder's best interest in mind negotiate for the best
terms and conditions of all the available proposal.
The implementation and execution of required processes in order to come to an 
agreement with the new lessee such as due diligence and negotiation may be take
longer than 3 months following the current's lease agreement expiration date.
The fund finds that it is appropriate to propose a short term of 3 months lease
extension with the current lessee under the variable rent scheme of 70% to the
fund and 30% to the lessee deriving from the Hotel's operating profit
Meanwhile, during the period for the unitholders' meeting to be held, if there 
are other prospect lease proposal submitted to the Fund, the Fund will disclose
necessary information in the invitation letters submitted to unitholders which
is not less than 14 days in advance prior to the date of Extraordinary General
Meeting.
Potential effects on unitholders from the approval of the lease proposal
From the above lease proposals, the Fund's rental revenue will decrease when 
comparing to the existing lease agreement which will effect on net asset value
of the fund and the return to the unitholders.
Matters to approve
Resolve to propose to the unitholders meeting to consider and approve to accept 
the new lease proposal for Patong Heritage Hotel Project and authorized the Fund
 to conduct the following:
1.    To negotiate, prepare, and execute a lease agreement and/or other agreement 
and/or any related document and to do any other necessary acts as related the
aforementioned actions in accordance to Unitholder's approval.
2.    In the event of amendment of terms and conditions from conducting due 
diligence process, the fund will proceed ahead with the key terms and conditions
of the lease agreement shall not be inferior to the terms approved by the
Unitholders.
3.    In the event of amendment of terms and conditions from conducting due 
diligence process shall deemed inferior comparing to the terms and conditions
approved by the unitholders, the fund is authorized to obtain the best possible
terms and conditions for the fund.
4.    In the case which the fund takes longer than 3 months in order to obtain and 
execute a new lease agreement, the fund shall propose for additional 3 months
extension of the lease agreement with the current lessee whereby the variable
rent shall be 70% to the fund and 30% to the lessee of the hotel's operating
profit.
This agenda shall be approved by the unitholder's meeting with the Votes of more
than half of the total number of units of the unitholders attending the meeting
 and having the right to vote.

2.    Resolved to propose to the unitholders meeting to consider and approve the 
Management Company to explore potential alternatives to manage the property for
the best benefit to unitholders
Background
Lease Agreement for Patong Heritage Hotel Project is made between MFC Asset 
Management Plc.('the Management Company") on behalf of MFC Patong Heritage
Property Fund ("the Fund") and Patong Heritage Co.,Ltd ("Patong Heritage") dated
 June 11,2014 ("the Lease Agreement") will end on June 10, 2019
In consideration of other possible alternatives, the Fund has taken the process 
of seeking a new lease. The Fund has appointed property agent to find new lessee
and to seek other possible alternatives to manage the property for the best
benefit of unitholders.
Implementation
IC Meeting No. 24/2018 approved to appoint Jones Lang Lasalle ("JLL") as 
exclusive property and marketing advisor to provide advice and assistance in
connection with any transactions of the property with significant service as
a)    Prepare  market material to provide prospective purchaser and prospective 
lessees
b)    Market the property and provide a list of prospective purchaser /investor and
 prospective lessees prospect
c)    Advise a strategy for negotiating with prospective purchasers and prospective
 lessee etc.
There are a few prospective lessees submitted indicative proposals to the Fund 
for consideration
In addition to JLL's mandate on assisting in negotiation with multiple of 
prospects potentially as the new lessee of the fund, JLL shall also advise in
parallel on exploring other alternatives perhaps sales of asset or any other
option that may prove to be more beneficial the unitholders whereby such
proposal shall be again proposed to the unit holders for further approval.
Opinion
For the best benefit of unitholders, the Fund should explore more potential 
alternatives for the property
Matters to approve
Resolve to propose to the unitholders meeting to consider and approve the Fund 
to explore any potential alternatives to manage the property for the best
benefit to unitholders.
This agenda shall be approved by the unitholder's meeting with the Votes of more
than half of the total number of units of the unitholders attending the meeting
 and having the right to vote.

Please be informed accordingly

Yours Faithfully,

(Ms. Natree Panassthrkorn)
                                                                                
       Executive Vice President
______________________________________________________________________
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