STAR-BULLETIN / MARCH 2007
Hyatt Corp.'s deadline to close on its purchase of the Hyatt Regency Waikiki Hotel is tomorrow.
Hyatt sale stalls
The 1,230-room hotel was sold for $445 million but the deal never closed
Hyatt Corp. will not meet an extended deadline to close on the $445 million purchase of its flagship hotel in Waikiki, according to sources familiar with the deal.
The Chicago-based company, which won court approval a year ago to purchase the 1,230-room hotel from its bankrupt Japanese owner, Azabu Buildings Co. Ltd., had extended the sale's closing date from Dec. 31 to April 3, according to bankruptcy court filings. Azabu went into bankruptcy in February 2006.
Instability within the credit markets since Hyatt won the bid last year has resulted in a more challenging market for buyers. Hyatt's $445 million bid has been described as a fairly aggressive price. The hotel operator is the sole prospective buyer negotiating with Azabu, according to sources involved in the deal who asked not to be identified
"Definitely the credit crunch has put a chill on several transactions in the market," said local tourism consultant Joseph Toy of Hospitality Advisors LLC. "From the time they won their bid to the closing date we've seen a dramatic change in the credit markets."
Hyatt is seeking to gain control of the hotel it has managed since 1976 by purchasing Azabu's stock. The company was required to deposit $44.5 million, or 10 percent of the sales price, three days after confirmation of the sale last March by the U.S. Bankruptcy Court.
The sale includes the King's Village Shopping Center, which is owned by Azabu Buildings' wholly owned subsidiary, Azabu USA Corp.
It is unclear whether Hyatt will walk away from the sale or seek another extension to close on the deal. Tom Roesser, who represents Hyatt Corp., declined comment. Scott Kawasaki, Hyatt's director of public relations and advertising, declined to comment. Honolulu attorney Chuck Choi, who represents Azabu, declined comment.
Meanwhile, a settlement has been reached in a lawsuit filed by Azabu and the committee of unsecured creditors against Azabu's Japan-based lender, Chuo Mitsui Trust & Banking Co. Ltd., Waikiki First Finance Corp. and Waikiki S.F. Corp. -- both owned by Honolulu-based Trinity Investments -- which holds the first and second mortgages on the hotel totaling $330 million. Terms of the settlement haven't been made public.
Azabu and the creditors had asserted that the lender's claims and the mortgages should either be rejected or reduced in priority. Chuo Mitsui's claims totaled $192 million.