Mirae-Asset-terminates-US-hotel-deal-with-Anbang
Mirae Asset office in Seoul/Photo courtesy of Mirae Asset

Korean asset manager blames struggling Chinese insurer for the failed transaction

South Korea’s Mirae Asset Global Investments said on May 4 that it has scrapped a $5.8 billion contract to purchase a portfolio of U.S. luxury hotels from China’s Anbang Insurance Group.

Regarding the collapsed transaction, the Seoul-based asset management company blamed Anbang for having failed to keep certain material obligations.

Among other things, Anbang had failed to timely disclose and discharge various material encumbrances and liabilities impairing the hotels and failed to continue the operation of the hotels in accordance with contractual requirements,” Mirae Asset said in a statement.

Anbang did not remedy these breaches, which thereby resulted in the termination of the contract in accordance with its terms by Mirae Asset.”

A consortium led by Mirae Asset agreed to buy 15 U.S. hotels from Anbang, the embattled financial group, on September 10 last year, and the former placed a 10 percent deposit.

Through due diligence, however, Mirae Asset found a lawsuit in the United States, which it says may affect the transaction. Mirae Asset asked Anbang to provide details but did not get satisfactory explanations.

We learned that Anbang is involved in litigation with a third party, a significant legal risk that even an insurance company refused to cover. As a company, which puts a top priority on risk management, we could not close the deal without thoroughly checking it,” a Mirae Asset official said.

We requested Anbang to give full explanations on the case on April 17, noticing Anbang was in default of its obligations, and the condition precedents necessary to close the transaction were not satisfied. But it did not reply until May 2, thus failing to keep the 15-day deadline stipulated in the contract agreement.”

The official said that Mirae Asset asked the escrow agent to return the 10-percent deposit.

He said that the lawsuit at issue is not about the discovery that titles of six hotels included in the Mirae Asset-Anbang deal had been improperly recorded with the wrong owners.

Misunderstanding about the title problems, with which some media outlets dealt, is cleared away. A lawsuit in question is a totally different one,” the official said.

However, he refused to elaborate on the litigation due to the non-disclosure agreement as the contract with Anbang was not terminated on mutual consent.

Mirae Asset would face a legal battle with Anbang, whose unit already filed a lawsuit with a Delaware court late last month.

Samsung-CT-Banner-ads