The threat of administration, which has been hanging over Dublin's Shelbourne hotel for the past two weeks, receded yesterday when its parent group announced an interim agreement with bank creditors, allowing it to meet a €20 million rental payment.
But the reprieve may be only temporary, with negotiations over the future of Le Meridien group, saddled with a €2 billion debt, expected to drag on for another month.
Creditors, including CIBC and Merrill Lynch, have agreed to fund the rental payment to Royal Bank of Scotland, which acquired 12 hotels, including the Shelbourne, in a €1.7 billion sale and leaseback agreement.
They had been considering putting the group into administration to prevent the bank recovering the money.
But this strategy appears to have been abandoned in weekend talks with Le Meridien. Instead, the hotel group has received extra liquidity to allow it discharge short-term debts.
Le Meridien expressed renewed optimism that the talks would secure its future.
"The group has secured a working capital facility that provides Le Meridien with additional working capital to bridge the period from now until re-capitalisation," according to a spokesman.
"Ongoing positive discussions with key stakeholders encourage the board to believe that the future of the group should be secured as, in the face of difficult circumstances, the underlying operating performance of Le Meridien has been as good as, if not better than, many competitors," the spokesman said.
Le Meridien owns 135 hotels around the world, including the Shelbourne in central Dublin, which is conservatively valued at €100 million.
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