Oxley terminates sale of its Mercure and Novotel hotels, shares fall 4.6%

Property developer Oxley Holdings has terminated a letter of intent from buyer Gracious Land on an interest to purchase its Mercure and Novotel hotels located along Stevens Road, Singapore with immediate effect, because the buyer had not made a subsequent deposit amount of S$38 million for the S$950 million deal.

In a regulatory filing on the Singapore Exchange late last night, the property developer posted the update on the sale, stating that among other things, the subsequent deposit of S$38 million, which is 4% of the consideration price, was not made by Gracious Land.

‘Oxley Gem (which is the subsidiary of Oxley and has the two hotels registered under its name), has, today, notified the purchaser that…the letter of intent is terminated with immediate effect on the account of a material and/or repudiatory breach,’ said Oxley.

Oxley shared that the initial deposit of 1% or S$9.5 million of the considered sale price, which had been made earlier from the purchaser is currently being requested to be refunded. Oxley stated that as per the announcement made in January regarding the sale and according to the terms in the letter of intent, the deposit is non-refundable.

Oxley shares down 4.6% following the fall-out

Earlier in January, Oxley had reported on the deal, but it did not disclose the buyer’s name.

In the earlier announcement, the property developer said the letter is non-binding and is subjected to the parties entering into the sale and purchase agreement. Under the terms of the deal, the purchaser can conduct due diligence on the property during the period until April 15.

The buyer was supposed to pay a sum of S$38 million, or 4% of the total deal value on February 28, and a subsequent sum of S$47.5 million on the agreed signing date, or April 15, whichever is earlier.

Going forward, Oxley said it will continue to explore opportunities with regard to the properties.

Read more on Oxley subsidiary to sell residential units in Ireland for €175.5 million.

Investors had reacted positively on the deal in January, with the stock up 6.78%, at S$0.32.

Following the news on the fall-out of the hotel deal last night, Oxley’s shares sank 4.55%, or S$0.015, to trade at S$0.32 at around 2.45pm, Singapore time.