IOI Corp’s RM73m deposit for Menara Citibank forfeited

http://biz.thestar.com.my/news/story.asp?file=/2008/11/27/business/20081127190735&sec=business

"KUALA LUMPUR: IOI Corp Bhd’s RM73.36mil paid to the vendors of Menara Citibank was forfeited after the plantation heavyweight aborted its proposed acquisition of Menara Citibank for RM586.73mil.
IOI Corp told Bursa Malaysia on Thursday that the share sale and purchase agreement dated Aug 29 for the proposed acquisition became unconditional on Oct 31.
The due date for payment of the balance purchase price was on Nov 11.
However, due to the recent sudden adverse developments in the global economic environment which have spread to this region and impacted negatively on business sentiments, IOI Corp decided not to proceed with the proposed acquisition.
IOI Corp it had received a letter from the vendors’ solicitors dated Nov 26 that they were terminating the agreement and had forfeited RM73.36mil paid earlier by IOI Corp.
The plantation company said it was seeking legal advice on the quantum of the forfeiture."


That's how bad the recession is getting. IOI would rather forfeit RM73 million than to pay up the remaining 513 million.
That's a 12.5% deposit. Forfeited.

In other words, IOI expects that it would take a BIGGER than 12.5% loss if it had continued the deal!

There you go.

Basically this (probably) means that IOI expects property prices... or at least the property price for Menara Citibank... to be drop by over 12.5%

Probably over 20%, actually, considering that doing this thing generates a lot of bad publicity for them, and damages their business relationships.


It might mean something else... but whatever the case is, this is definitely bad news. The exact form of this bad news is still unfolding though.