Hyatt’s Corp.’s offer for Azabu’s assets sparks bidding war
Other companies are upset that Hyatt was chosen as the stalking horse in the auction
The Hyatt Corp.'s initial offer of $445 million for the assets of the bankrupt Azabu Buildings Co. Ltd., owner of the Hyatt Regency Waikiki Resort & Spa, has triggered a bidding war.
U.S. Bankruptcy Judge Robert Faris authorized an auction of Azabu on Dec. 7.
In late November, the judge also approved bidding procedures, selecting Hyatt as the "stalking horse" bidder, raising objections from two other parties.
As the stalking horse, Hyatt can increase its bid at the sale, scheduled for March 12, and would get a $5 million break-up fee plus up to $2 million in expenses for its time and efforts should another bidder win.
Hyatt originally asked for a $13.3 million break-up fee.
Competing bids must be at least $452.5 million and increase in increments of $1 million.
What both Trinity Investments LLC and Beecher Ltd. object to most is that Hyatt was chosen as the "stalking horse."
Trinity, which owns the Kahala Hotel & Resort, has filed an objection to the sale with the court and offered $450 million.
Beecher, which offered to purchase the hotel for $447 million, is also objecting to the sale to Hyatt, according to Chuck C. Choi, attorney for Azabu.
"Hyatt was selected because, first of all, their offer was the cleanest," said Wayne Mau, attorney for the official committee of unsecured creditors. "It didn't have any contingencies on it."
Trinity's offer, on the other hand, came with contingencies that Mau declined to disclose.
Mau said plenty of other offers other than those by the three parties could still be coming in before the due date, which has been pushed back to Feb. 27.
Choi, attorney for Azabu, said both Trinity and Beecher opposed the selection of Hyatt as the stalking horse, and thus, in an unusual move, submitted their own revised proposals.
"It's really unusual to see potential buyers bidding to be the stalking horse," said Choi. "There will be a further auction, so they will have their chance."
Azabu has said it will use money from the sale to repay creditors. Secured creditors, owed about $330 million, will be fully repaid, and unsecured creditors, owed about $4.8 billion, will receive a small portion of their claims, according to court papers.
The Azabu assets for sale at the auction will include the Waikiki hotel, which Hyatt manages, plus the King's Village shopping center in Waikiki, which is owned by Azabu USA Corp.
Beecher Ltd.; Preh Inc.; Wac Inc.; Nippon Capital Partners LLC; and Nippon Portfolio Partners III LLC, with total claims of $103.8 million, filed an involuntary petition forcing Azabu into bankruptcy court in November 2005.
Bloomberg News Service contributed to this report.