Keppel DC Reit proposes sale of M1-issued NetCo bonds, preference shares
[SINGAPORE] The manager of Keppel DC Real Estate Investment Trust (Reit) on Monday (Aug 11) proposed the disposal of all its NetCo bonds and preference shares issued by network operator M1.
This comes after parent company Keppel announced that it will sell M1’s telco business to Simba Telecom, a mobile network operator, for S$1.43 billion. Keppel will receive nearly S$1 billion for its 83.9 per cent effective stake in M1.
Simba – whose parent company is Tuas Ltd, which is owned by Australian businessman David Teoh’s TPG Telecom – is expected to create more revenue pools and career opportunities from its combination with M1.
NetCo is a subsidiary of M1 and holds some of the telco’s mobile, fixed and fibre assets. It also has a network services agreement with M1.
On Dec 22, 2021, Keppel DC Reit subscribed to S$88.7 million in bonds issued by NetCo through its trustee, Perpetual (Asia). Under the terms, the Reit will receive S$11 million a year, comprising both the principal amount and interest, for a period of 15 years from the date of issuance.
Under the same transaction, Keppel DC Reit also subscribed to 100 per cent of the preference shares issued by NetCo, for S$1 million.
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These shares entitle the Reit to have 50 per cent representation on NetCo’s board of directors – a move intended to give it additional protection for its investment in the bonds.
The NetCo bonds and preference shares will be sold to an unrelated third party, which is a Singapore-incorporated holding company, Keppel DC Reit’s manager said.
Assuming the sale was completed on Monday, the buyer will have to pay around S$79.2 million, the manager said. This amount comprises S$77.2 million as a principal amount for the NetCo bonds, S$1 million in accrued interest, and a principal amount of S$1 million for the preference shares.
The deal is subject to clearance from the Infocomm Media Development Authority.
Units of Keppel DC Reit were trading flat at S$2.31 as at 3.30 pm on Monday.
