Quarz Capital and Black Crane Capital have requisitioned a meeting at Sabana Shariah Compliant REIT, seeking to unearth evidence of what it sees as widespread conflicts of interest related to the company’s planned merger with ESR REIT. The activist also asked Sabana to distribute more of the cash earned by the company so far this year.

Quarz and Black Crane, who control a combined 11% stake in Sabana, are opposed to a planned tie-up with ESR REIT, claiming the transaction will hurt Sabana shareholders. The deal offers Sabana shareholders 0.94 shares in ESR for each share held, a ratio criticized by Quarz and Black Crane for substantially undervaluing Sabana.

One of the activists’ chief concerns about the merger is that both REITs are managed by affiliates of ESR Cayman, which Quarz and Black Crane claim has been favoring ESR REIT at the expense of Sabana shareholders over the last year because of its “significantly higher fees from and value of stake” in ESR REIT compared to Sabana.

In the latest move against the proposed merger, Quarz and Black Crane called for a special meeting that would see Sabana shareholders vote on several resolutions aimed at shedding light on the relationships between its top echelon and ESR REIT as well as ESR Cayman.

In a Tuesday letter obtained by Activist Insight Online, the pair target Ng Shin Ein, who is currently an independent non-executive director of Sabana’s manager. Quarz and Black Crane want to know why she was recently designated an independent director, from a non-independent one, given that Ng has had “substantial business relationships” with ESR Cayman in the past.

Other resolutions touch on recent hirings by Sabana of people affiliated with ESR REIT, the letter reads.

Quarz and Black Crane also demanded Sabana “immediately” distribute half of the SG$0.58 per share withheld earlier this year and all of the distributable income from July to September. Sabana declared a distribution per share of SG$1.05 attributable to the first half of 2020 but only paid SG$0.47, saying it needs to conserve capital to better cope with the coronavirus crisis.

In July, Sabana promoted the transaction with ESR by saying it will lead to “enhanced portfolio diversification, strength, and resilience,” improve its growth outlook, and increase balance sheet flexibility.

Shares in Sabana closed up 1.4% on Tuesday at SG$0.36, giving the company a market value of SG$380 million ($280 million).