SINGAPORE (Mar 20): Oxley Gem, a subsidiary of Oxley Holdings, has terminated the letter of intent (LOI) it received from Gracious Land in Jan for the $950 million purchase of its Mercure and Novotel hotels, after not receiving a subsequent deposit of $38 million when it was due.
In a late night filing on Tuesday, the group says Gracious Land has requested for a refund of the initial $9.5 million deposit it paid for the two hotels on Stevens Road to Oxley Gem.
Terms of of the LOI does not provide for such a refund for the deposit save for under certain specified events under the contract, says the group, adding that Oxley Gem “reserves its rights to take all steps necessary to protect its interest”.
The group intends to continue exploring other opportunities regarding its Mercure and Novotel hotels on Stevens Road.
DBS Vickers Securities analyst Rachel Tan previously estimated that if the hotel sale had gone through as intended, the proceeds could have potentially helped to reduce Oxley’s net debt-to-equity ratio to 1.8 times from 2.5 times as at Sept 2018.
Cash proceeds could have alleviated some of the group’s urgent cash requirements such as in repaying its $300 million and $150 million retail bonds, which are due to expire in Nov and May 2020, respectively.
Shares in Oxley closed 4.35% lower at 33 cents on Tuesday.