Accordia Golf Trust manager U-turns on currency hedging for divestment deal

Annabeth Leow

Published Wed, Sep 23, 2020 · 01:37 PM

ACCORDIA Golf Trust (AGT) entered into a foreign-exchange forward contract on Wednesday over the sale of its interests in all its golf courses, the manager has said.

The contract for 25.2 billion yen (S$327.8 million), or 38.7 per cent of the price tag in the divestment deal with the trust's sponsor, comes after the manager's earlier announcement that it was not planning for any arrangements to hedge the purchase value.

The manager has now said that, while it had not entered into hedging arrangements earlier because AGT unitholders had not yet approved the planned divestment, it believes that such a move is now appropriate "to maximise the returns to unitholders".

It argued that the hedging locks in a favourable yen-to-Singapore dollar exchange rate and mitigates against the impact of a potential softening in the yen, which "would correspondingly reduce the amount of distributions that unitholders will receive".

The manager added that it will continue to monitor the exchange rate "and may enter into additional foreign-exchange forward contracts" for the rest of the purchase amount.

AGT is selling its 88 golf courses in Japan to sponsor Accordia Golf for 65.2 billion yen, in a transaction approved by unitholders in mid-September. Investors also voted for a winding-up of the trust, with the divestment expected to be completed on Sept 29.