Barclay brothers move to take control of hotel group

THE BARCLAY brothers, who control 64 per cent of the Maybourne Hotel Group in London, will this week propose injecting about £200 million (about €230 million) into the group in an attempt to wrest control from fellow investor Paddy McKillen.

The group behind the Claridge’s, Connaught and Berkeley hotels is at the centre of a tug of war between media tycoons the Barclays and Mr McKillen, a 36 per cent shareholder in the hotels.

David and Frederick Barclay, owners of the Daily Telegraph, will propose a rights issue at a board meeting this week to raise about £200 million from the shareholders.

This would force Mr McKillen to inject £72 million if he is to avoid his shareholding being diluted in a move which is interpreted as an attempt by the brothers to take control of the group.

The brothers have recently made a proposal to Irish Bank Resolution Corporation, formerly Anglo Irish Bank, to buy £130 million of debt secured on Mr McKillen’s shareholding.

The Barclays have presented their proposal to the bank as a means of reducing the State’s loan book, as the bank is being wound down.

IBRC is resisting the overture because the loans owing on Mr McKillen’s shares represent only part of its commercial relationship with him.

The High Court was told during Mr McKillen’s legal action with the National Asset Management Agency last year that he had loans and connected borrowings totalling €800 million with Anglo.

A spokesman for the Barclays had no comment on their plans.

A spokeswoman for Mr McKillen queried whether they could seek cash from shareholders. “We would question their right to a single seat on the board, let alone to propose a rights issue,” she said.

Mr McKillen has taken legal proceedings against the brothers in London High Court, claiming oppression of his minority rights, in a case to be heard in March.

The brothers have taken majority control of the group by purchasing the bank debt secured on the 35.5 per cent shareholding held by investor Derek Quinlan.

They have also bought a Cypriot firm, which held a 25 per cent stake owned by the family of Manchester businessman Peter Green and a 3 per cent stake held by stockbroker Kyran McLaughlin.

They borrowed from UK bank Barclays to buy €800 million debt on the group from Nama.

Mr McKillen raised his stake several years ago through a cash call on shareholders, leapfrogging Mr Quinlan on the share register to become the biggest shareholder.