Subsidiary, chairman of EC World Reit’s sponsor liable to pay US$11.3M after loan default

AN APPLICATION has been filed against Forchn International (FIPL) and the chairman of its parent company for an order that they are jointly and severally liable to pay US$11.3 million to Franklin Medici Alternative Investment.

Forchn Holdings Group, the parent company of FIPL, is also the sponsor of EC World Real Estate Investment Trust (Reit).

EC World Reit’s manager said on Tuesday (Jun 4) that it was informed by FIPL on Monday that it entered into a loan agreement with Franklin Medici Alternative Investment on or about Feb 27 last year.

The loan bore a principal amount of US$10 million for a term of six months.

At the same time, a wholly owned subsidiary of FIPL – Forchn Global – entered into a deed of charge for 58 million units in EC

World Reit to secure the repayment obligation of FIPL.

Zhang Guobiao, chairman of Forchn Holdings Group and EC World Reit, provided a personal guarantee in favour of Franklin Medici Alternative Investment.

FIPL failed to repay the loan and, as at May 19, the outstanding principal amount and the accrued interest amounted to US$11.3 million.

The manager said it understands that FIPL and Zhang are negotiating with Franklin Medici Alternative Investment on possible settlement plans.

The board of directors of the manager will give further updates as and when there are material developments.

EC World Reit’s units have been suspended from trading on the Singapore Exchange since Aug 31 last year, after its manager said the Reit and its subsidiaries were unable to fully repay their offshore interest expenses due on that day.