Oxley Holdings, the leading property developer has dismissed a LOI (letter of intent) it had signed with Gracious Land Pte Ltd with respect to the sale of Novotel and Mercure hotels for $950 million.
The termination of the LOI has been due to default of $38 million deposit by the buyer.
The markets didn’t respond to this announcement in a positive way as the shares of Oxley fell by 1.5 cents or 4.45% on Wednesday and closed at 31.5 cents.
The stock had opened 6 cents lower but was able to recover from the lows. The company in its regulatory filing which was issued late on March 19 stated that Gracious Land had failed to deport the subsequent amount which is 4% of the price of this deal.
The Letter of Intent that was announced in January earlier had stated that Gracious Land would make a payment of the $38 million on Feb 28 and this would be followed by a further deposit of $47.5 million on the date the definitive sale and purchase agreement is signed on the 15th of April whichever is earlier.
Oxley thus stated that they have been forced to immediately terminate the LOI given that Gracious Land had breached the material and/or repudiatory terms as mentioned in the LOI.
Gracious Land on its part has issued a notice demanding immediate refund of $9.5 million it has paid as initial deposit for acquisition of the properties.
Oxley stressed on the fact that the initial amount paid is non-refundable other than under extra-ordinary circumstances that are mentioned clearly in the LOI. It further added that it had every right to take steps that would protect its own interests.
Oxley Group also said that they would explore all other opportunities with respect to the sale of the hotels and would keep all the shareholders informed about updates on these properties.