ROH takes GROREIT and ONEAM to court over Royal Orchid Sheraton dispute
ROH has sued GROREIT and ONE Asset Management, insisting its Royal Orchid Sheraton buy-back rights remain valid ahead of an October 28 unitholder vote.
Royal Orchid Hotel (Thailand) Public Company Limited (ROH) has taken legal action against GROREIT and ONE Asset Management Limited, maintaining that its contractual right to buy back the Royal Orchid Sheraton Hotel and Towers remains valid ahead of a crucial unitholder meeting on Wednesday (October 28).
ROH informed the Stock Exchange of Thailand that it had filed a lawsuit with the South Bangkok Civil Court after a dispute emerged over its right to repurchase the hotel assets from the Grande Royal Orchid Hospitality Real Estate Investment Trust with Buy-Back Condition (GROREIT).
The company said agreements entered into with MFC Asset Management Public Company Limited, acting as trustee of GROREIT, set out the parties’ rights and obligations concerning the repurchase of the Royal Orchid Sheraton Hotel and Towers Project.
ROH maintained that it continued to have the right to buy back the property under the relevant agreements and intended to complete the transaction.
It said it had consistently demonstrated its intention to exercise the right and had taken steps to coordinate with the relevant parties to complete the repurchase under the agreed terms.
Dispute over whether buy-back right has expired
The dispute intensified after ONE Asset Management, acting as GROREIT’s REIT manager, took the position that ROH’s contractual buy-back right had expired.
Official SET disclosures show that the lease and scheduled repurchase date expired on July 14. ONEAM and MFC subsequently concluded that ROH had not completed the buy-back within the required period and that its right under the asset sale and purchase agreement had therefore expired.
ROH disputes that interpretation.
The company said it remained entitled to repurchase the property and had continued to communicate its intention to do so.
On August 14, ROH formally informed GROREIT that it was ready to buy back the assets for THB4.873 billion, with financial support from an investment backer, subject to due diligence, internal approvals and the completion of relevant documentation.
Although ONEAM and MFC maintained that the contractual right had expired, ONEAM decided to place ROH’s proposal before unitholders so they could consider all available options.
Unitholders to consider three sale options
GROREIT’s unitholders are scheduled to meet electronically at 2pm on Wednesday to decide the future of the hotel assets.
Under the official meeting agenda, the first proposal is to sell the core assets to ROH for THB4.873 billion, with the transaction to be completed within 14 days of approval.
The second proposal would allow the assets to be sold to Orchid Hospitality Company Limited for THB5.3 billion if unitholders reject the ROH proposal or if ROH is unable to meet the stipulated conditions and timetable.
Orchid Hospitality submitted its THB5.3-billion offer on September 4.
A third option would authorise ONEAM to dispose of the hotel through an open auction if the first two alternatives are rejected or cannot be completed.
Unitholders will also be asked to approve the termination and liquidation of GROREIT once its core assets have been sold.
GROREIT previously sued ROH
The latest action follows a lawsuit brought against ROH on October 21 by lawyers appointed by ONEAM and MFC.
According to GROREIT’s SET filing, the case was filed with the South Bangkok Civil Court for alleged breach of contract and tort after ROH did not repurchase the property or return possession following the end of the lease.
The trust is seeking, among other measures, the return of the hotel property, transfer of rights and licences connected with hotel operations, unpaid rent dating from May with 5% annual interest, and damages.
GROREIT also sought an interim court order requiring ROH to deposit THB25 million a month as security for potential losses until the case is concluded or the court orders otherwise.
ROH said that when it issued its latest statement it had not yet received a copy of the lawsuit and therefore did not know its full details.
However, the company said it would contest the case and present evidence to support its position that it had acted in good faith in seeking to exercise its contractual buy-back right.
ROH said it had now filed its own lawsuit against GROREIT and ONEAM at the South Bangkok Civil Court.
ROH warns of further legal action
ROH also warned that parties involved in any transaction concerning the disputed property had been made aware of its assertion that it retained the right to repurchase the assets.
The company said it could pursue further legal action against parties involved if a sale proceeded in a manner it considered prejudicial to its contractual rights.
That could include asking the court to revoke a sale transaction involving the disputed assets, ROH said.
The company stressed that it did not intend to cause losses to GROREIT unitholders, but believed court action was necessary to preserve what it considers its legitimate contractual rights.
ROH said it remained open to resolving the dispute if all parties acted in good faith and in accordance with the relevant agreements and law.
