IRISH INVESTORS who backed the purchase of 47 Marriott Hotels in the UK in 2007 by a consortium that included Dublin-based Quinlan Private (QP) face having their shareholdings diluted significantly as part of a refinancing of the company’s debts.
Quinlan and its consortium partners are believed to be in negotiations with Royal Bank of Scotland on a debt-for-equity swap of £300-400 million, which will reflect a sharp fall in the value of the properties since the deal was inked.
The hotels were acquired in April 2007 in a £1.1 billion deal by a group of investors led and advised by QP and Israeli real estate investment company Igal Ahouvi Group.
According to documents published at the time, the deal was financed by way of a non-recourse, long-term, fixed-interest loan of £856.1 million.
In addition, the bank agreed to provide £62.2 million to finance additional investments.
Independent forecasts at that time predicted that average net revenues from the hotels, after deducting all of the expenses for a period of 10 years (before financial expenses), would be £78 million annually.
A source close to the talks said a “consensual restructuring of the debt against a backdrop of materially improved trading in the UK since the turn of the year” was likely to be achieved.
The Marriott chain comprises 39 properties in England, five in Scotland and three in Wales. They had 8,456 rooms between them and are managed by Marriott under a 30-year contract.
Reports have suggested that five of the Marriott hotels have since been sold to reduce the debt. Under the terms of the deal, RBS was entitled to 20 per cent of any gain on the sale of any hotels.
No comment was available from Quinlan Private yesterday.
