Forterra Trust (formerly: Treasury China Trust)

[Boon]

Boon, thanks. Agree the short term borrowing from NF affiliate feels too cosy - a 10% interest rate on unsecured borrowing for 6 months where the lender has (indirectly) almost 30% of the equity plus control over the trustee manager...seems rich.

The period of six months is interesting. The large loan refinance for TP falls due in June next year - this loan is through to March. Why not schedule the short term borrowing to mature in June and re-fix a consolidated amount with the lending on TP (secured, therfore cheaper)..? I don't necessarily believe they will repay the short term loan from cash - Miriam has been clear that the board want to hold onto this cash reserve as a necessary buffer. Plus, there will also be further marketing/promotion costs coming out of this pile in the next three quarters as phases 1-3 are launched.

I am more concerened by the sloppy performance of the third party proxt agent, Forterra's checks on the AGM results and the fact that the shares have traded for 4 months+ under the misconcpetion that the board could have authorised a dilutive equity raise (whether they did or not). The 'clarification' notice to address this should have been an 'error' notice - the former implies they were clearing up an uncertain issue, whereas they were admitting a huge error and the defeat of the board in its main AGM proposal. In the UK we would see this as a significant vote of no confidence. Our board seem not to be affected by such shareholder resolutions. It is a poor reflection on them.

Hi PekingDuck,

The cost of short term borrowing of SGD 94 million (USD 75) for 6 months at 10% amounts to SGD 4.7 million – not a small amount - it is controversial and a concern to me and would be an even bigger concern if they don’t repay it when it is due at the end of 6 months – this is highly unlikely considering that revenue and cash flow are expected to improve significantly with the launch of TP1 (retail) and TP2 then.

There are certainly plenty of marketing and promotional activities one could do with SGD 4.7 million.

I think the Management needs to explain what they have done (or intend to do) with the increased borrowing of SGD 33 million for the HHM?

The sloppiness in conducting voting is also a big concern - but I have no problem with the dilutive effect of new share issuance of up to 20% - as long as they have been issued on an equitable basis.

(vested)