Hotel group had £3m guarantee on cost overruns

The Four Seasons Hotel Group signed a £3 million guarantee to fund cost overruns in relation to the construction of the proposed five-star hotel in Ballsbridge, Dublin.

The project has significantly exceeded its £51 million budget and a receiver appointed to the development companies involved last week will be asking the international hotel group to produce more funding to help finish the building.

A note in the multinational's accounts for 1999, published in May, discloses the existence of the guarantee. The involvement of the hotel group in the financing of the construction project was not known up to now. A spokeswoman for the group said the guarantee had been signed as part of the "overall package" for the hotel development.

Mr Pearse Farrell, of Farrell Grant Sparks, was appointed receiver to Simmonscourt Holdings Ltd and Harvard Properties Ltd last week by three of the four banks involved in funding the Ballsbridge development.

Bank of Scotland (Ireland) did not support the appointment of the receiver but was overruled by ACCBank, Anglo-Irish Bank and Scotia Bank. The four banks have between them have funded construction of the hotel to date.

Bank of Scotland (Ireland) is taking legal action against ACCBank, the lead bank in the consortium, over its handling of the project.

Among the matters which have upset the bank is a charge registered in October 1999 against Harvard Properties for "any sum in excess of £9,000,0000 which may be received by Harvard Properties" pursuant to a December 1997 agreement between the company and Stoneyview Ltd.

Apparently Bank of Scotland (Ireland) did not know at the time that the charge had been registered. The entity entitled to the charge is Marlast Ltd, an Irish registered company incorporated in December 1997 and which is owned by a company based in the British Virgin Islands, Rhea Investments Ltd.

Stoneyview Ltd, which is now dissolved, was an Irish company. One of its directors was Mr Derek Quinlan, the accountant and former Revenue inspector, who played a central role in putting together a 10-person partnership which has an agreement to buy the Ballsbridge hotel, when complete, for £60 million. Who the true beneficial owner of Marlast is not known. Harvard Properties was incorporated in May 1997. The directors are Mr Dan McGing, who was non-executive chairman of ACCBank until up to a year earlier, and Mr Barry Kenny, a financial adviser.

On March 3rd, 1998, Harvard registered a charge with ACCBank and another with Simmonscourt Holdings. Around the same time, Simmonscourt created a charge with ACCBank.

Simmonscourt, which was incorporated in December 1996, is the developer of the Ballsbridge hotel. Its directors are Irish estate agent Mr Sean Dillon, and two US businessmen, Mr Robert Radovan and Mr William Criswell.

Harvard acted as a conduit for most of the funding which went from the banks to Simmonscourt. It also acted as promoter of the project and monitored the drawing down of funds and the spending of the money by Simmonscourt.

Why it would be getting funds from Stoneyview, a company associated with Mr Quinlan, is not clear. The registered offices of both Harvard and Stoneyview are at Clifton House, Fitzwilliam Street, Dublin 2.

The 10 investors put together by Mr Quinlan, the Nollaig Partnership, stand to receive significant tax allowances from their investment, though a spokesman has said their main motivation is to act as hoteliers.