Japan Post Holdings Co. is expected to cancel the controversial sales contract for its 70 Kampo no Yado inns and nine housing facilities to leasing company Orix Corp., sources said Feb. 6.

The ¥10.9 billion lump-sum "fire sale" has been repeatedly slammed by Internal Affairs and Communications Minister Kunio Hatoyama. Japan Post President Yoshifumi Nishikawa recently offered to temporarily freeze the deal, the sources said.

Japan Post may begin mulling other options at a board meeting in late February, including selling the properties one by one, they said.

Orix apparently won the contract by outbidding more than 20 competitors, but Hatoyama has cast doubt on the deal because the details of the bidding process have not been disclosed.

A price of ¥10.9 billion for 70 hotels is too low if it cost ¥240 billion to build them in the first place, Hatoyama said.

He also raised the possibility of conflict of interest because Orix President Yoshihiko Miyauchi was one of the main proponents of privatizing the postal service while heading the government's deregulation panel.