Anbang sues Mirae Asset over US hotel deal

By Park Jae-hyuk

China's state-controlled Anbang Insurance Group has filed a lawsuit against Mirae Asset Global Investments over the Korean financial services company's failure to complete payment of $5.8 billion for its purchase of 15 luxury hotels in the United States, Mirae Asset said Tuesday.

According to the company, Anbang filed the case with the Delaware Chancery Court, Monday.

Mirae Asset was supposed to finish payments for the hotels in nine U.S. cities, including 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 by April 17.

It had planned to raise $1.8 billion for the deal from subsidiaries and cover the remaining $4 billion through borrowing from local investment banks.

Bloomberg, however, has reported that the lender group led by Goldman Sachs has been unable to generate sufficient investor interest because of the COVID-19 pandemic's negative impact on the travel and hospitality industries.

The foreign news outlet reported earlier this month that Mirae Asset had asked the Chinese insurer for more time to close the deal because the required debt financing wasn't immediately available.

The Financial Times also reported that if the deal falls through, the Korean firm will lose its $600 million deposit, because the terms of its purchase agreement do not specify a pandemic as a material adverse clause that would give it flexibility in reworking or dropping the deal.

Mirae Asset denied the claims 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 offer them,” a Mirae Asset official said. “We notified the seller on April 17 that we have the right to cancel the contract if the seller does not solve the problem within 15 days, so we were waiting for their response by May 2.”

Mirae Asset will also invest 489.9 billion won ($394 million) in Hyundai Development Company's (HDC) purchase of Asiana Airlines worth 2.5 trillion won, which is assumed to have been delayed.

The financial firm was initially expected to promote synergy through its investments in the aviation and lodging industries, but that has faced setbacks due to governments closing borders and banning public gatherings in response to the coronavirus pandemic.

“Sectors reliant on trade and the free movement of people such as passenger airlines, shipping, lodging and leisure, which includes cruise lines and restaurants are most exposed,” Moody's Investors Service Vice President Benjamin Nelson said.

Despite the growing concerns, Mirae Asset said last month that the pandemic would have a limited impact on its investment portfolio.

“Since the U.S. Federal Reserve made rate cuts and decided to provide 8.5 trillion won in liquidity, the current situation is considered favorable for us to get loans,” a company official said. “Hotels are blue chips, so we expect they will be assessed at their original value as time passes.”