On 28 November 2008, Millennium & Copthorne Hotels (M&C), the London-listed hotel subsidiary of City Developments, declared that the contract for the clearance of Millennium Seoul Hilton to Kangho AMC Corporation was cancelled because the latter was not able to polish its financing arrangements in the agreed and extended completion date (28 November 2008) due to the global financial crisis.
“While the company was ready, willing and able to complete the disposal, Kangho has, in the current difficult financial markets, been unable to finalise its financing arrangements and, consequently, the remainder of the purchase price remains unpaid,” said M&C.
After the announcement of the proposed disposal by M&C on 24 June 2008, Kangho AMC had asked the firm for the completion date extension, which was actually scheduled on 30 September 2008. On Sept 29, M&C mentioned that Kangho AMC Co and the company had compromised to the revision of the disposal completion date from 30 September to 28 November 2008.
The termination of Kangho AMC Co. to purchase Millennium Seoul Hilton is expected to have an impact on M&C and CDL because the two are anticipated to gain profits from the disposal in Q4 2008. On the positive side, M&C will still have the non-refundable deposits worth 59 billion that it has received from Kangho AMC Co.
M&C will continue managing the Millennium Seoul Hilton since its disposal has been abolished. The chain has already experienced high labour costs and labour issues since M&C acquired the freehold property for US$228.5 million in 1999.