Hibiki Path Advisors’ Engagement with Accordia Golf Trust

SINGAPORE–(BUSINESS WIRE)–We, Hibiki Path Advisors Pte. Ltd. (“Hibiki”) manages and/or advises certain entities with aggregate holding of 7.6% of Accordia Golf Trust (“AGT”) shares as of 17^th Jun, 2020. As one of the minority non-conflicted unitholders of AGT, Hibiki is currently actively engaging the trustee manager of AGT, Accordia Golf Trust Management (“AGTM”), expressing our deep concern on current situation.

Back in 28^th Nov 2019, AGTM announced that they have received a non-binding bid proposal, later revealed as from the parent company, Accordia Golf Co., Ltd, and they have formed an independent committee to review on the proposal on 13^th Jan 2020. Since then AGTM has not been forthcoming to provide updates on the status of the non-binding bid proposal and had been questioned by Singapore Exchange – Securities Trading (“SGX-ST”) on several occasions.

On 11^th Jun 2020, AGTM published the financial statement of their full year results (FY19/20) and especially since this is a sensitive period where the non-binding bid proposal from the parent company is ongoing, we have noticed a deeply concerning facts on the financial statements. AGTM has announced that dividend for the 2^nd half of the financial year has dropped by 21% YOY even though the Q3 DPU was 16.2% above the previous year and Q4 operation has also outperformed the previous year substantially. A closer analysis indicates that the drop in the dividend was mainly due to two substantial reserve items which Hibiki is still seeking clarifications with AGTM.

The most glaring item is the “Special Reserve for Operations” amounting to JPY 1,200mn. There is no reasonable explanation on how such large amount is derived especially when the cash flow remains healthy with no significant risks to the cash balance and loan covenants even during the current Covid-19 situation. Implementation of this reserve by the board has sliced the dividend payout by around SGD 1.38 cents per unit almost halving its 2^nd half dividend to SGD 1.69 cents. Such cash actually belongs to the unitholders, and Hibiki is seeking justification on why such subjective judgment was made by the board while it has sufficient cash of JPY 8,918mn (approximately 10.3 cents per unit) on its Balance sheet as of March 2020.

The next item of concern is the “Project Payment” amounting to JPY 362mn which is 4% of Q4 Operating Income. According to the published financial statement, this was for the project work of reviewing the non-binding bid proposal. As shareholder, Hibiki is both disappointed and deeply concerned as there was no mention of such high fees being incurred since the appointment of the independent committee. Further to that, there was no substantial updates on the work done by the independent committee in the report but yet such this large amount has been placed as reserve for FY19/20, resulting in significant reduction of cash dividend payment to unitholders.

There are more questionable items such as further asset impairment on its Nishikigahara Golf Course that has reduced the theoretical Net Asset Value of the trust. The value of the Nishikigahara was already reduced back in FY18/19 due to the same issue mentioned in the presentation from AGTM and it makes no sense to further reduce the value in FY19/20 unless there are new notices from the government that AGTM did not disclose.

From the items listed above, Hibiki is deeply concerned on the corporate governance standards delivered by AGTM during this sensitive period as the non-binding bid proposal is still in process. Hibiki urges AGTM to provide assurance and evidence that they are acting in the best interest for all unitholders especially when the bidder is the parent company which, by itself, raises the question on “conflict of interest”. Hibiki had sent AGTM a letter to raise the above queries in further details on 15^th June 2020 and the letter is shared on Hibiki’s website as per the link provided below.

While Hibiki continue to engage AGTM actively, we implore for all fellow AGT unitholders to conduct independent reviews and take the necessary actions with AGTM to uphold the fiduciary duties due to all unitholders through this sensitive period.

http://www.hibiki-path-advisors.com/en/message/2020/english-letter-to-board-of-members-of-accordia-golf-trust-june-2020/

Contacts

Yuya Shimizu

Chief Investment Officer

Hibiki Path Advisors Pte. Ltd.

info@hibiki-path-advisors.com