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HONG KONG (Reuters) - Ascendas Hospitality Trust cut the size of its planned Singapore initial public offering (IPO) by 13 percent on Wednesday after being forced to strip a South Korean hotel from its portfolio in a blow to already fragile sentiment for new listings in Asia.
The company, backed by Ascendas Land (International), also reopened the books on the IPO, in an unusual move after having priced it last Friday at the bottom of an indicative range. The IPO size was reduced to about $304 million, limiting Ascendas Hospitality's ability to purchase properties and repay debt.
"I can't think of a single example like that," said an investment banker not involved in the deal. "That is very messy."
The company filed an updated prospectus on Wednesday, outlining plans to sell 437.33 million units at S$0.88 each. The trust originally priced the IPO last week at the bottom of an indicative range and was set to raise about $350 million with the sale of 506.1 million units.
At S$0.88 per unit, the trust would offer a yield of about 7.9 percent in the year ended March 2013 and 8 percent in the year ended March 2014, the company said.
The reduced offering could further pressure investor appetite for stock sales in Asia, where equity capital market deals tumbled 30.4 percent to $77.9 billion in the first half, with IPO volumes down 62 percent.
Ascendas Land, which has committed to buy about 42 percent of the units on offer, said in a statement the IPO had "received strong support" from investors.
The trust was forced to drop a South Korean five-star business hotel called the Pullman Ambassador Changwon from the IPO after creditors obtained injunctions that would have delayed or prohibited its acquisition by Ascendas. The hotel originally accounted for 10 percent of the value of the trust, according to Ascendas Hospitality's preliminary prospectus dated July 9.
Ascendas Hospitality said in its initial prospectus the hotel's seller, Dosiwasaram Co Ltd, had obtained consent from some of its creditors to sell the property, but there was no guarantee all consents had been secured.
"If I was participating in the deal, when the facts change, I guess you have to readjust accordingly," said Tim Gibson, head of property equities for Asia at Henderson Global Investors, which manages $800 million in Asia real estate stocks. "All bets aren't necessarily off, they just have to be 're-placed.' This may be more problematic now."
The trust now comprises 10 hotel properties with 3,482 rooms. Seven of the hotels are in Australia, accounting for 67 percent of the value of the trust, with one hotel in Japan making up 24 percent. Two hotels in China make up another 9 percent.
The public offering will open on July 19 and close on July 24, with its debut on the Singapore stock exchange slated for July 27, according to the prospectus.
Nomura (8604.T) and Standard Chartered (STAN.L) are joint global coordinators for the offering with HSBC (HSBA.L) and DBS (DBSM.SI) acting as joint bookrunners. Nomura and Standard Chartered officials declined to comment on the IPO.
($1 = 1.2648 Singapore dollars)
Additional reporting by Daniel Stanton, Kevin Lim and Rachel Armstrong in SINGAPORE; Editing by Matt Driskill