Dasin Retail Trust Scraps Proposed Deal With Mystery Mainland Entity as Restructuring Talks Drag On

Defaulted mall landlord Dasin Retail Trust notified the Singapore Exchange on Thursday that a proposed memorandum of understanding with a “reputable Chinese entity” has been terminated over concerns about legality and some recent actions taken by Zhang Zhencheng, who together with his two brothers controls the REIT’s sponsor.

Representatives of the trust, which owns and operates a portfolio of seven shopping malls across Guangdong province in mainland China, had gathered with lenders, key unitholders and the unnamed entity during a series of meetings last month to discuss terms of the MoU, according to an SGX filing.

During a meeting on 28 June, a representative of the trust’s major unitholder gave his view that the transactions contemplated under the MOU “are illegal under Chinese law”, while the entity “expressed its dissatisfaction” at the actions taken by Zhang, who is embroiled in legal action against Tan Huay Lim, lead independent director and chair of the audit and risk committee at the trust’s manager.

Two days after the meeting, the lenders expressed disappointment about the outcome and said they would await a formal response from the manager’s board before embarking on any further discussions in connection with the debt restructuring exercise.

Court Intrigue

Dasin Retail Trust has been struggling to reach an agreement with its local and offshore lenders to restructure debt after a series of defaults and repayment extensions since last year.

“The board will continue to explore the available options in relation to its restructuring exercise with the lenders,” chairman Kong Weipeng said in Thursday’s SGX filing.

Zhang, who formerly served as chairman of the REIT’s manager, on 25 May filed an originating claim before the Singapore High Court alleging that the actions of Tan were “oppressive” and  “prejudicial” to Zhang.

Zhang asked the court to strip Tan of his directorship seat and to restrain him from further involvement in the trust’s refinancing activities. Both the manager and Tan have expressed their intent to contest the originating claim.

Zhang, who continues to serve as a non-executive director of the trust’s manager, also asked the court to prohibit Tan from participating in the manager’s talks with the unnamed Chinese entity on a potential investment or partnership.

Zhang is currently a minority shareholder in the manager after he sold a portion of his stake to Beijing-based private equity firm Sino-Ocean Capital Holding in 2021. He gave up his chairman role at the time that Sino-Ocean bought control of the manager in a deal he is now seeking to repeal after Sino-Ocean defaulted on an unrelated debt.

Extensions Not Approved

In a separate SGX filing on Thursday, Kong said the exchange had informed the board that requests for extensions until 31 August to issue the trust’s 2022 annual report and until 30 September to hold the annual general meeting for 2022 were not approved by the bourse.

The chairman said the trust obtained the approval of the Monetary Authority of Singapore to hold its annual general meeting no later than 31 July but has yet to file an application with the central bank for an extension until 30 September.

The manager plans to submit an application after discussion with its external auditors on the timetable of the audit.