THE non-executive directors of Dasin Retail Trust – Zhang Zhencheng and Zhang Zhongming – have been served a letter of demand from the trustee-manager for breaching their duties owed to the latter.
The directors were asked to compensate Dasin Retail Trust Management for the losses it suffered from a potential investor deal that fell through, said the trustee-manager in a bourse filing on Thursday (Aug 29).
A reputable Chinese state-owned entity had wanted to invest in the trust, said the trustee-manager in the letter dated Aug 28.
This includes the capital injection the trust could have potentially received from the deal, the costs and expenses incurred during negotiations, as well as losses from the delay of the refinancing process.
The trustee-manager also demanded that the duo pay up fees entitled to its financial adviser for the work done on the refinancing process.
The duo, along with Zhang Zhencheng’s associates which include the former management of the trustee-manager, had allegedly frustrated and scuppered the deal. This was said to be done to ensure that Zhang Zhencheng would not lose his status as the single largest unitholder in the trust and his shareholding in the trustee-manager.
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The trustee-manager also noted that they impeded the progress on the restructuring of Dasin Retail Trust, even though it “was not in the best interests of unitholders”.
The pair and the associates had allegedly sabotaged and obstructed the trustee-manager’s attempts to restructure Dasin Retail Trust’s debts.
Additionally, Zhang Zhencheng and his associates had sought to gain control of Dasin Retail Trust Management by attempting to wind it up and oust board members who do not do his bidding, said the trustee-manager.
Hence, the trustee-manager demanded the pair to stop obstructing and frustrating the trust’s restructuring efforts.
It also asked for them to stop their attempts to transfer its powers to Zhang Zhencheng by having requisitionists issue a requisition notice to convene a general meeting of unitholders to pass certain resolutions.
In the notice dated Jun 13, some unitholders requisitioned for an extraordinary and an ordinary general meeting to vote on two resolutions. The first resolution was to approve the proposed amendment of the trust deed, and the second was to appoint a new adviser appointed by the unitholders.
However, the trustee-manager noted in its letter on Wednesday that the proposed amendments to the trust deed would “severely cripple” the ability of the trustee-manager to manage the trust’s assets.
This is because it would mean transferring control over the management of key aspects of the trust to Zhang Zhencheng.
“The second set of resolutions are accordingly neither in the best interests of the trustee-manager nor the trust’s unitholders, as a whole,” it said.
Furthermore, it also demanded that the minority directors pay up the total rental arrears owed under a master lease.
The pair was also asked to compensate the trustee-manager for the losses it suffered resulting from their failure to comply with the trust’s financial control procedures and policies.
Zhang Zhencheng had allegedly approved payments from subsidiaries of various special purpose vehicles to third parties, thereby violating the trust’s internal procedures and policies on at least four occasions.
Lastly, the pair was demanded to stop all legal proceedings against the trustee-manager, and to compensate the latter the legal costs and expenses incurred.
Units of Dasin Retail Trust were trading 20.6 per cent or S$0.007 higher at S$0.041 as at 1.18 pm on Thursday.
