Horizon Owners Have 2 Weeks To Decide Their Fate

Source : The Business Times, August 27, 2007

Majority sellers seek individual legal advice in face of potential lawsuit

(SINGAPORE) Two weeks - that's all the time the majority sellers of Horizon Towers now have to find a way to salvage the botched collective sale of their development.

Horizon Towers poser: The sellers need to decide if and how they should revive the pact with the buyers

If they fail to do so - by the ominous deadline of Sept 11 - each of the 255 owners who signed off on the en bloc sale, along with the sales committee members, will be sued for some $4 million each.

Faced with such a prospect, each majority seller is now understood to be seeking individual legal advice as to how to defend himself against the lawsuit.

Collectively, the sellers also need to decide if and how they should revive the agreement inked with the intended buyers - Hotel Properties (HPL), Morgan Stanley Real Estate-managed funds and Qatar Investment Authority - for the sale of Horizon Towers.

This comes as HPL and its partners make good on their threat to sue the majority sellers for failing to hold up their end of the deal.

Documents obtained by The Business Times show that the majority sellers, represented by Tan Rajah & Cheah, had received a letter last Thursday from HPL's lawyers, Allen & Gledhill (A&G). The letter alleged that the sellers are in breach of their agreement, for failing to 'do everything in their power' to obtain a collective sales order from the Strata Titles Board (STB) approving the sale of Horizon Towers.

STB had on Aug 3 thrown out the sellers' application for a collective sales order, on the grounds that it was defective. STB said the sellers had failed to include certain documents in their application and, hence, failed to comply with requirements laid out by the law. The board's decision meant the en bloc sale of Horizon Towers could not be completed by the agreement deadline of Aug 11.

HPL and its partners then asked the sellers to extend the en bloc sale completion deadline by four months - to Dec 11 - during which time, they wanted the sellers to appeal the STB's decision and file a fresh application for a new sales order, if necessary.

The sellers said they needed time to consider what steps they should take - but have not reverted since.

The lack of response has now prompted HPL and its partners to take action. 'Our client is not prepared to wait indefinitely for (you) to extend the (deadline),' A&G's letter to the sellers said.

HPL and its partners commenced proceedings in the High Court on Thursday, declaring that the majority sellers are in 'repudiatory breach of contract'. The buyers are demanding that the sellers extend the original deadline and 'do everything necessary to obtain the collective sales order'.

HPL and its partners have given the sellers until Sept 11 to do so - failing which, they would sue each of the sellers, for a total of between $800 million and $1 billion. With more than 255 owners - of 173 units who agreed to the sale - being named as defendants, it means each of them could be sued for up to $4 million each.

But should the sellers do as demanded - and a collective sales order is eventually obtained - HPL and its partners will honour their end of the bargain, that is, they will buy the 99-year leasehold Horizon Towers for a total of $500 million.

For their part, the majority sellers have denied allegations that they breached the sales agreement. They have also refused to extend the deadline by four months. But, they have appealed to the High Court to review the STB's decision.

The sellers, however, declined to say what their next move would be.

Some sellers whom BT spoke to said they would now be reviewing the various options ahead of them, and seeking legal advice as to how to defend themselves against the lawsuits they each face. They will meet on Sept 7 to discuss their fate.

The majority sellers - who make up some 84 per cent of the owners of Horizon Towers - had in February agreed to sell the development en bloc to HPL and its partners.

The $500 million price tag would have meant that the owners of the 199 apartments would have pocketed about $2.3 million each and the owners of the 11 penthouses at least $4 million each.

Still, it's believed some of the sellers later regretted agreeing to the en bloc sale, when the likes of The Grangeford estate nearby sold subsequently for more than double the Horizon Towers price, on a per sq ft basis.

Some minority sellers - those who didn't agree to the sale - also filed their objections to the sale, on various grounds.

It was after listening to some of the objections filed that the STB decided not to grant the collective sales order.

The minority sellers are not being sued, since they did not ink the sales agreement with HPL and its partners.