Debt difficulties have derailed Millennium & Copthorne's sale of the Millennium Seoul Hilton.
The deal, worth about $560m at the time of its announcement back in June, has looked in trouble since September when the buyer, Kangho AMC, asked for an extension while it finalised its debt package.
The sale had encouraged investors in M&C and on the day of the announcement its share price leapt 12%, its biggest hike in more than a decade. The reaction at the end of November when M&C said the deal had fallen through was less marked with a 1.5% drop.
Of wider interest is what this deal's failure says about just how much the global debt markets have deteriorated in recent months. Or at least it might had there not been question marks about how a loss making Korean property developer was in a position to buy the hotel in the first place.
At the time of the deal local press reports cast doubts on the ability of cash-strapped Kangho to raise the necessary finance. The company had sales of just Korean Won 174m in 2007 and had a debt of Korean Won 241bn. The price of the hotel in local currency terms was Korean Won 580bn.
Kangho's plan had been to buy up property around the hotel and develop it into a leisure complex. It appears that debt funders viewed the project as too much for a company of its size.
M&C will now continue to manage the hotel under the Hilton franchise.