Mirae Asset says no financing problem with closing $5.8 bn hotels deal

Mire Asset Global Investments Co. Ltd. has no problem with financing a $5.8 billion acquisition of 15 luxury hotels from Anbang Insurance Group and is still in discussions with the Chinese insurer to close the deal, the South Korean company said.

The remarks were made in response to news reports on April 28 that the Chinese insurance group sued Mirae Asset over missing the payment by the April 17 deadline.

“We have no problem at all with raising money for the acquisition,” a Mirae Asset source told the Korean Investors on April 28.

“We have been in discussions with Anbang about detailed conditions, including the timeframe for closing the deal, as market conditions have changed substantially in the aftermath of the Covid-19.”

Before Anbang filed the lawsuit in a US court, Mirae had claimed that the payment deadline was extended under an agreement with the state-controlled Chinese insurer.

According to the Financial Times, if the deal falters, Mirae stands to lose its $600 million in deposit.

Mirae appears to be in dilemma over whether to push ahead with the deal at the agreed-upon price, or give up the deposit and walk away. The coronavirus pandemic has dealt a direct blow to the hotel industry because of travel restrictions and border closures.

Mirae claimed that the delayed closing of the deal was due to the failure by Anbang to meet certain preconditions which were not specified.

“If they failed to resolve the issue within 15 days, we will have the right to cancel the contract,” the Mirae source said. “In response to the lawsuit, we are considering legal action.”

The Korea Times reported that Mirae would wait for Anbangs’s response by May 2 to its call for meeting the unspecified preconditions.

Last month, Mirae said it remained on track to complete the acquisition, dismissing market reports that the portfolio deal was at risk of collapsing because of difficulty in securing funding.

The hotel portfolio includes the Westin St. Francis in San Francisco, the Loews Santa Monica Beach Hotel, the JW Marriott Essex House in New York and the Four Seasons in Jackson Hole, Wyoming.

The deal is set to be the largest cross-border purchase by a South Korean financial services firm.

Write to Hyun-il Lee at hiuneal@hankyung.com