Property developer Oxley Holdings has terminated a letter of intent (LOI) to sell its Mercure and Novotel hotels to Gracious Land for $950 million with immediate effect, as a subsequent deposit of $38 million was not made by the buyer.
The news hit Oxley shares after trading opened yesterday.
The stock was down 4.54 per cent, or 1.5 cents, at 31.5 cents apiece, after opening 6 per cent lower.
In a regulatory filing late on Tuesday night, Oxley said that among other things, the subsequent deposit, being 4 per cent of the total consideration, was not made by Gracious Land.
According to the terms of the LOI first announced in January, Gracious Land was supposed to pay the $38 million on Feb 28, and a further sum of $47.5 million on the signing date of the definitive sale and purchase agreement or April 15, whichever is earlier.
Therefore, Gracious Land has been notified that the LOI is terminated with immediate effect on the account of a "material and/or repudiatory breach of the LOI", Oxley said.
Gracious Land has provided a notice for a refund of its initial deposit of $9.5 million.
However, Oxley noted that this initial deposit is non-refundable, save for the occurrence of certain specific events highlighted in the LOI, and that it reserves the right to take all necessary steps to protect its interest.
The group added that it will continue to explore opportunities with regard to the hotels, and will inform shareholders of any updates in due course.
Shares in Oxley closed at 32 cents apiece on Wednesday, down 3.03 per cent, or one cent.