Royal Orchid Hotel (Thailand) (ROH) has reaffirmed its commitment to repurchase the five-star Royal Orchid Sheraton Riverside Hotel Bangkok for 4.87 billion baht, arguing that the payment instructions issued by the real estate investment trust (REIT) were inconsistent with the terms of the original agreement.
In a filing to the Stock Exchange of Thailand on Wednesday, ROH countered an earlier disclosure by One Asset Management (ONEAM), manager of Grande Royal Orchid Hospitality REIT (GROREIT), which stated the hotel operator had failed to complete the repurchase transaction in accordance with the agreed terms.
GROREIT acquired the freehold rights to the Royal Orchid Sheraton Hotel and Towers from ROH when tourism plunged during the Covid-19 pandemic, under a sale-and-leaseback structure. ROH then leased the assets back to continue operating the hotel business, with an agreement to repurchase it within five years.
According to ONEAM, ROH defaulted on its obligation to repurchase the luxury hotel property on the scheduled maturity date of July 14.
However, ROH managing director Vitavas Vibhagool said MFC Asset Management Plc, acting as trustee of the REIT, had notified the company of a payment method for the repurchase that did not comply with the terms specified in the agreement.
He said the buyback remains on track and the dispute relates solely to the payment procedure rather than any unwillingness or inability on the company's part to fulfil its contractual obligations.
ROH sent a letter to MFC requesting that the trustee rectify what it considers a breach of the agreement.
The company also dispatched an authorised representative to the relevant land office on July 14 to clarify its position on the matter.
"The company intends to repurchase the assets in accordance with its obligations under the agreement," Mr Vitavas said, adding that ROH could not proceed under the payment method proposed by MFC because it differed from the contractual terms.
The company said it faces no financial or operational constraints that would prevent it from completing the buyback.
In addition, ROH noted it still retains the right to manage the Royal Orchid Sheraton Riverside Hotel Bangkok while the dispute remains unresolved.
ONEAM said that because the repurchase was not completed on schedule, the trustee has begun preparations to appoint Starwood as interim manager of the hotel in place of ROH to ensure business continuity and uninterrupted operations.
