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Mirae Asset decides to cancel US hotel deal
The 15 U.S. luxury hotels which were supposed to be bought by Mirae Asset Global Investments from China's Anbang Insurance Group / Courtesy of Mirae Asset Global Investments
By Park Jae-hyuk
By Park Jae-hyuk
Mirae Asset Global Investments said Monday it has decided to cancel its acquisition of 15 luxury hotels in the United States from China's state-controlled Anbang Insurance Group for $5.8 billion, citing the seller's alleged breach of contract.
According to Mirae Asset, a termination notice was sent to Anbang, Sunday, over the sale and purchase agreement they signed Sept. 10, 2019, for the hotels in nine U.S. cities. The hotels included the Westin St. Francis in San Francisco, Loews Santa Monica Beach Hotel, JW Marriott Essex House in New York and the Four Seasons in Jackson Hole, Wyoming.
It also asked the escrow agent to return its deposit, which is assumed to be about $600 million.
As Anbang told the escrow agent not to return the deposit, Mirae Asset will likely file a lawsuit against the seller, which will begin a years-long process.
“Although Anbang was in breach of certain material obligations, it sought to close the transaction on April 17,” Mirae Asset said in a press release.
“Among other things, Anbang failed to disclose and discharge various material encumbrances and liabilities impairing the hotels, and failed to continue the operation of the hotels in accordance with contractual requirements in a timely manner.”
Mirae Asset said it notified Anbang, April 17, that it had the right to cancel the contract if the seller did not resolve the issue within 15 days.
But Anbang did not act until May 2, according to Mirae Asset.
“Anbang has already resorted to litigation by bringing claims last week in the U.S. against us and our affiliated entities. We categorically deny Anbang's claims and are confident that we will be vindicated,” Mirae Asset said.
“We will protect our rights vigorously in accordance with the terms of the agreement.”
Anbang sued Mirae Asset in Delaware, April 27, alleging the buyer had failed to complete payment.
According to Anbang, Mirae Asset was supposed to finalize payments for the hotels by April 17.
Bloomberg reported that Mirae Asset had asked the Chinese insurer for more time to close the deal because the required debt financing wasn't immediately available.
Mirae Asset, however, has denied the claim it was facing difficulties in raising the money, saying the deal was postponed as the seller had failed to fulfill prerequisites.
“We found out the seller was embroiled in a lawsuit with a third party, so we've continued to ask the seller for related documents, but the seller declined to provide them,” a Mirae Asset official said at that time.
In response, Anbang said in a press release Monday that its lawsuit with the third party has already been finished, so the hotels do not have any problems with their ownerships.
The Chinese firm claimed it explained this matter to Mirae Asset through a petition it filed with the Delaware court.