Man behind Jurys makeover has few reservations
John Brennan oversaw a financial restructuring that reduced Jurys Inn’s debt by 60 per cent and has set his sights on long-term growth
John Brennan outside Jurys Christchurch. Photograph: Eric Luke
If you were in the vicinity of Jurys Inn’s hotels in the London districts of Chelsea or Islington early last Thursday week, you might have seen the company’s chief executive John Brennan on a so-called Boris bike taking part in a staff relay to raise €40,000 for charities in Ireland and the UK.
Brennan has been on quite a journey of late, both professionally and personally. In one hectic week in mid-April, he became a father for the first time when his daughter Libby was born while also concluding a major financial restructuring of Jurys Inn that saw its debt reduced by 60 per cent to £240 million.
All in the space of three days.
“I know which one was quicker,” Brennan joked when we met recently at the Christchurch property, where it all began for Jurys Inn in 1993. The restructuring took 14 long months to conclude with its lenders and shareholders.
The Government’s decision to put key lender Irish Bank Resolution Corporation into liquidation in February potentially threw a spanner into the works but the deal pressed ahead.
IBRC was one of three lenders – AIB and Ulster Bank being the others – that Brennan and his team were negotiating with over its loans. They agreed to write off £290 million of the debt. Ulster Bank took equity in the business in return for debt write off while the £120 million in new equity invested in the business was paid to the banks.
It now remains to be seen where the IBRC loan will end up. The special liquidators at KPMG have until the end of this year to sell IBRC’s assets or else they will be transferred to the National Asset Management Agency to be worked through over time.
Brennan is sanguine about the liquidation although he would prefer if Jurys Inn did not have the stigma of being in Nama: “Somebody else will own a performing loan that will ultimately be repaid in due course,” he says.
On the right track
The business appears to be on the right track financially. Vesway Ltd and Subsidiaries, which operates Jurys Inn, made a loss of £6.5 million in 2012 compared with £31.7 million a year earlier. Revenue rose by 3.8 per cent to £153 million, the third year running that its turnover has increased. The chain also saw its operating profit rise to £25 million last year from £3.1 million in 2011.
Jurys Inn is a good example of the madness that gripped the property and development market here in the Celtic Tiger years. The company was sold in 2007 by the then Jurys Doyle hotel group (now trading as the Doyle Collection) for €1.166 billion to a group of investors put together by financier Derek Quinlan.
Quinlan subsequently sold half the equity to Oman Investment Fund. The sale price and £650 million debt placed on the company were based around ambitious assumptions on economic growth and the availability of cheap finance that went up in smoke when Lehman Brothers collapsed in 2008 and markets globally went into a spin. Brennan wasn’t with the company when all of this took place, joining only in December 2008. But he was left to pick up the mess.
“It seemed like a very high price for the business but there were lots of other transactions that were very high prices [IN 2007],” he says. Brennan argues that a key difference between Jurys Inn and other frothy deals done in the boom is that the hotel chain has an “underlying business that is successful, profitable, and employs nearly 2,000 people.” The debt level was simply too high but that has now has been addressed.
“We haven’t got anything here now other than a debt level that is sustainable,” he says. “It’s been a process that has involved pain for everybody, equity shareholders and lenders. Hopefully, as a result of this restructuring, the business now has a sustainable future, that the debt that is there will be paid back with interest, and that the business will continue to trade and be successful.”