LIPPO-MAPLETREE - Lippo Malls Indonesia Retail Trust - Investor ...

Risk factorsthereby materially and adversely affecting the ability of the tenants of the Retail Malls and the MasterLessee to make rental payments to the Indonesian SPCs.Labour activism and unrest may materially and adversely affect the Properties.Laws permitting the formation of labour unions, combined with weak economic conditions, have resulted,and may continue to result, in labour unrest and activism in Indonesia. In March 2003, the Indonesiangovernment enacted Law No. 13/2003 (the “Labour Law”) that requires further implementation ofregulations that may substantively affect labour relations in Indonesia.The Labour Law requires bipartite forums with participation from employers and employees, and theparticipation of more than 50.0% of the employees of a company, in order for a collective labour agreementto be negotiated and, in addition, the Labour Law creates procedures that are more permissive to thestaging of strikes.Labour unrest and activism in Indonesia could disrupt operations of the Properties, and thus couldmaterially and adversely affect the ability of the tenants of the Retail Malls and the Master Lessee to makerental payments to the Indonesian SPCs.RISKS RELATING TO AN INVESTMENT IN THE UNITSThe sale or possible sale of a substantial number of Units by the Cornerstone Investors in thepublic market following the lapse of any applicable lock-up arrangements could have adverseeffects on LMIR Trust.The Cornerstone Investors, being Lippo Strategic and Mapletree LM, will receive Cornerstone Units,amounting to an aggregate of approximately 39.1% of the total issued Units as at the Listing Date,(assuming no exercise of the Over-allotment Option).Lippo Holdings Inc, Lippo Capital Limited, Lippo Cayman Limited and Lanius Ltd are deemed to haveinterests in the Cornerstone Units due to their direct or indirect (as the case may be) interests in LippoStrategic.Lippo Strategic (also the Unit Lender), Lippo Holdings Inc, Lippo Capital Limited, Lippo Cayman Limited,Lanius Ltd, MIPL, Mapletree Dextra Pte Ltd and Mapletree LM have on 9 November 2007 each agreed to(a)(b)a lock-up arrangement in respect of their direct or indirect interests (as the case may be) in theCornerstone Units (or any securities convertible or exchangeable for units or which carry any rights tosubscribe for or purchase units) (adjusted for any bonus issue, consolidation or subdivision), as at theListing Date during the First Lock-Up Period; anda lock-up arrangement in respect of their direct or indirect interests (as the case may be) in 50.0% ofthe Cornerstone Units (or any securities convertible or exchangeable for units or which carry anyrights to subscribe for or purchase units) (adjusted for any bonus issue, consolidation orsubdivision)as at the Listing Date during the Second Lock-Up Period, subject to certain exceptions.(See “Plan of Distribution—Lock-Up Arrangements”).However, there is no assurance that any of Lippo Strategic (also the Unit Lender), Lippo Holdings Inc,Lippo Capital Limited, Lippo Cayman Limited, Lanius Ltd, MIPL, Mapletree Dextra Pte Ltd and MapletreeLM will not dispose of its direct or indirect interest in the Cornerstone Units following the expiry of the FirstLock-Up Period and the Second Lock-Up Period. There is also no assurance that the CornerstoneInvestors will not dispose of their direct or indirect interests in the Cornerstone Units. In the event that anyof the Cornerstone Investors decides to transfer or dispose of its direct or indirect interest in theCornerstone Units, there may be a material and adverse impact on the market price of the Units.LMIR Trust may not be able to make distributions to Unitholders or the level of distributionsmay fall.The net operating profit earned from real estate investments depends on, among other factors, the amountof rental income received, and the level of property, operating and other expenses incurred. If theproperties which are directly or indirectly held by LMIR Trust do not generate sufficient net operating83