Following the news yesterday that conference hotel operator QHotels Group, backed by Alchemy Partners, has appointed PwC as administrator, there has been a surge in administrations and sales that is changing the landscape of major venue and hotel groups.
City analysts have said deals over Principal Hayley Group, the Malmaison and Hotel du Vin chains and a portfolio of 42 Marriott hotels in Britain are all near to being finalised as the banks and investors face up to a pile of debt restructurings that threaten the sector.
The QHotels move, after the group struggled to repay its £370m debt owed to the Irish Bank Resolution Corporation, sees the business absorbed into a new holding company controlled by the IBRC, which plans a three-year ‘workout’ of the debt. It has not been disclosed what impact this had on Alchemy’s investment amidst reports that they have been forced to take a writedown under the terms of the deal.
Principal Hayley, now in the hands of Lloyds Bank after investor Primera handed in the keys last year, writing off a reported £200m investment, is reported to be close to a deal with Starwood Capital for a reported £400m. A deal at this level would see the banks taking a major writedown and management shareholders being wiped out.
The Abu Dhabi Investment Authority is reportedly close to a £640m deal over the Marriott properties. If true, the figure is significantly lower than the £900m of debt with the Royal Bank of Scotland. It is understood Marriott International would continue to operate the hotels under the proposed deal.
The auction sale of the Malmaison and Hotel du Vin businesses was put on hold when parent company MWB Group Holdings went into administration in November 2012. The process is reportedly back on track with US investment funds and private equity rumoured to be showing interest.
MWB was founded by the property entrepreneur Richard Balfour-Lynn in 1982. He left the company in March 2012 after a dramatic slump in MWB’s share price and is being pursued by investors at Pyrho complaining about poor corporate governance. The MWB administration has triggered a bid from Regus for the service office part of MWB (MWBEX ) which is expected to be determined by the receivers Deloitte in March.
A senior industry director commented to Conference News: “2013 has started with bad news from MWB and now QHotels and is a strong signal that investors and banks are finally going to tackle the debt problems. The inevitably is that we see these and other well know brands face takeover bids or a staged break up as the banks seek to get out. QHotels have been hit hard by the recession, the structural shift in the conference market and falls in asset values which has hampered a good and well respected business. We know that confidence in our sector from banks and investors is low and the best performing companies will now have to show some leadership and post some decent trading results.”
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