By Fiona Chan

AFTER staging a successful rights issue last month, retail fund CapitaMall Trust (CMT) is paying the banks that arranged the deal in an unusual way - with shopping vouchers.

CMT will pay part of the fees due to DBS Bank and JP Morgan, the joint lead managers and underwriters of the rights issue, in CapitaVouchers that could go up to a few hundred thousand dollars.

The vouchers will be redeemable at all the 12 malls owned by CMT, as well as at Clarke Quay, which is owned by CMT's parent, property giant CapitaLand.

CMT's malls include Plaza Singapura, Bugis Junction, Junction 8, Raffles City Shopping Centre, Funan DigitaLife Mall, Tampines Mall and IMM.

The voucher payment will form a portion of the $1.2 million 'incentive fee' CMT intends to pay the two banks for their performance in arranging the rights issue, said a CMT Management spokesman yesterday in a response to queries from The Straits Times.

The incentive fee is in turn about a tenth of the total underwriting fees of $13.5 million paid to the banks. It is meant to 'incentivise the underwriters in managing the rights issue' and is payable at CMT's discretion, depending on the underwriters' performance, the advice they gave and the outcome of the issue.

With the 'success of the rights issue', CMT Management 'is pleased to pay the incentive fee to the underwriters', said the spokesman. The $1.23 billion rights issue, aimed at raising money to pay off $956.2 million of CMT's debt due this year, was 1.16 times oversubscribed when it closed on March 25.

The spokesman added that this was a 'positive outcome amid current market conditions'.

Paying part of the incentive fee in vouchers also demonstrates CMT's 'commitment to support our tenants', the spokesman said. As Singapore's worst-ever recession drags on, retailers have been hard hit by falling sales and thrifty consumers.

'This is a very small component of the total underwriting fees and is a win-win outcome as use of the vouchers will help to generate revenue spin-offs for our tenants and CMT,' said the spokesman.

This interesting twist in CMT's rights issue brings to the fore some of the creative measures that companies are adopting to stay afloat and conserve cash in the downturn.

CapitaLand, CMT's parent, was the first to explore the novel step of using shopping vouchers in lieu of cash.

It paid out $1 million in staff bonuses this year in the form of vouchers redeemable at CMT's malls. The vouchers came in denominations of $5, $10 and $15, and were aimed at helping CapitaLand's retail tenants by increasing consumer spending at the malls.

Other companies, such as OCBC Bank, have opted to pay scrip dividends, which means shareholders can choose to receive dividends in shares instead of cash. For every shareholder opting to receive shares, the company can conserve more cash.

Real estate investment trusts CapitaCommercial Trust and Ascendas Reit are also said to be considering using scrip dividends to meet their regular distribution payouts.

CMT's rights issue came as a surprise to the market when it was announced in February. The trust priced the nine-for- 10 offer at 82 cents a unit, drawing some criticism from analysts who saw the rights issue as being steeply discounted and value-dilutive.

But others said the rights issue significantly lowered CMT's debt levels, putting it in a better position to make acquisitions and raise money in the future.

CMT shares closed down 2 cents at $1.26 yesterday.

This article was first published in The Straits Times.