Hotel group makes loss after emerging from examinership

THE COMPANY behind the Lynch Hotel Group, which successfully emerged from examinership almost a year ago, made a pre-tax loss of €680,000 in the 21-month period to the end of December 2009, down from a loss of €2.8 million in the previous 12 months.

Accounts for West County Hotel (Ennis) Ltd show the company had an operating loss of €4.4 million during the period.

A spokesman said the operating loss included an additional €3.4 million write-down on the carrying value of the hotels on the company’s books, undertaken as part of the examinership process.

“The operating cash flow is extremely positive, and we expect that to continue into 2011,” company financial director Ciarán Cronin told The Irish Times.

West County Hotel (Ennis) Ltd controls seven hotels in the Lynch Group – West County Hotel in Ennis; George Boutique and South Court in Limerick; Ocean Cove in Kilkee; Clare Inn in Dromoland; and Breaffy House and Breaffy Woods in Mayo.

The accounts state the company is continuing to experience difficult trading conditions, but is confident of reducing the trading loss in the coming 12 months and returning to profitability in the medium term, primarily through continued cost reduction.

Increased facilities and support from the company’s bankers mean the company will be in a position to trade for a period of 12 months from the sign-off of the financial statements last August 12th, the accounts state. The company’s lenders are AIB, Bank of Ireland and Bank of Scotland (Ireland).

Mr Cronin said yesterday the group had been in negotiation with Bank of Scotland (Ireland) about reorganising its loans and credit facilities in light of the bank’s impending exit from the Irish market. Those discussions were progressing well, he said.

Mr Cronin said the group was also affected by downward pressure on room rates, with the average price per room down 10 per cent on last year.

The Lynch Hotel Group successfully emerged from examinership last November. As part of the restructuring plan, preferential creditors took a write-down of 85 per cent on debts, with unsecured creditors taking a 90 per cent write-down.

The filed accounts show that the company netted just over €5 million as a result of the settlement of creditor liabilities following the examinership.