Oxley terminates LOI for $950m sale of Mercure and Novotel hotels

Its purchaser Gracious Land failed to make its subsequent 4% consideration deposit of $38m.

Oxley Holdings’ wholly-owned subsidiary Oxley Gem has terminated its letter of intent (LOI) with immediate effect for the sale of its Mercure and Novotel Hotels along Stevens Road after purchaser Gracious Land failed to make its subsequent deposit of $38m, an announcement revealed.

Oxley announced in January 2019 that it accepted the LOI to acquire its Mercure and Novotel Hotels for $950m. The Mercure and Novotel Hotels, which house 254 and 518 rooms respectively, were acquired by Oxley in March 2013 and occupy a land area of 18,477 sqm.

Under the terms of the LOI, upon the receipt of a $9.5m non-refundable deposit by Oxley Gem, the purchaser would also pay a sum of $38m, equivalent to 4% of the consideration, on 28 February and a further sum of $47.5m on the signing date of the definitive sale and purchase agreement or on 15 April, depending on which comes earlier, the announcement stated.

Also read: Oxley's $950m hotel divestment could see 4.7% gross yield: analyst

“Pursuant to the terms of the LOI, an initial deposit of $9.5m was made by the purchaser to Oxley Gem. The purchaser had provided a notice for, inter alia, a refund of such initial deposit,” Oxley’s executive chairman and CEO Ching Chiat Kwong said in a statement filed with the Singapore Exchange (SGX).

According to Ching, the Group will continue to explore opportunities in respect of the hotels and will make the relevant update announcements or developments in due course.