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Anbang Unit Sues Mirae to Complete $5.8 Billion Hotel Deal

The firm filed a lawsuit in Delaware Chancery Court seeing an order “compelling defendants to perform their obligations.”

(Bloomberg)—An Anbang Insurance Group Co. unit sued to force South Korea’s Mirae Asset Global Investments Co. to complete its $5.8 billion purchase of a portfolio of U.S. luxury hotels as the coronavirus pandemic roils financial markets and travel.

The suit was filed under seal in Delaware Chancery Court Monday. In a public summary, officials of the Anbang unit said the suit “seeks an order compelling defendants to specifically perform their obligations under a sale and purchase agreement and certain equity commitment letters.”

The deal was slated to close on April 17, people familiar with the matter said. The Anbang unit has alleged that Mirae is suffering from buyer’s remorse because of hotel closures caused by the pandemic and it has been unable to secure favorable terms for financing, said the people, who requested anonymity because the matter is private.

Mirae officials had asked the Beijing-based insurer for more time to close the deal because the required debt financing isn’t immediately available, Bloomberg News reported earlier this month.

The portfolio of 15 luxury hotels, which Anbang acquired via its acquisition of Strategic Hotels & Resorts Inc., includes the Westin St. Francis in San Francisco, Loews Santa Monica Beach Hotel, JW Marriott Essex House in New York and the Four Seasons in Jackson Hole, Wyoming.

A Mirae representative couldn’t immediately be reached outside regular Korean business hours. The company posted a 10% deposit in September, a person familiar with the matter said at the time.

Lending for hospitality transactions has all but disappeared with the uncertainty over when the global travel industry can recover from the Covid-19 pandemic. With much of the world’s population under strict lock down, airlines and hotel operators are cratering and examining their options.

Occupancy rates at U.S. luxury hotel occupancy the week through April 18 was 9.9%, down from 73% during the comparable week in 2019, according to data from STR. With so few guests, more properties are likely to close, SunTrust Robinson Humphrey said in a research note earlier this month.

China’s two-year state custody of Anbang, a poster child for a slew of Chinese companies that expanded globally and took on too much debt, ended in February. China created Dajia Insurance Group to take over Anbang’s insurance operations.

The case is AB Stable VIII LLC v. MAPS Hotel and Resorts One LLC, No. 2020-0310, Delaware Chancery Court (Wilmington)

To contact the reporters on this story: Jef Feeley in Wilmington, Delaware at [email protected];

Gillian Tan in New York at [email protected].

To contact the editors responsible for this story: David Glovin at [email protected]

Steve Stroth

© 2020 Bloomberg L.P.

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