Lloyds has sold its Moran Hotel Group loans to a US hedge fund, Canyon Capital Advisors, according to the hotel operator.
The group is “at an advanced stage of a restructuring plan,” it said. Lloyds agreed to sell as much as €140 million in loans at a discount of about 70 per cent to a unit of the US hedge fund, said two people with knowledge of the transaction.
As well as the Red Cow Inn in west Dublin, the group owns hotels in London as wells as the Bewley’s Hotels in Dublin, Leeds and Manchester.
Selling Irish loans
Lloyds, the UK’s largest mortgage lender, is selling Irish loans – acquired through its takeover of HBOS – after being caught up in the implosion of the country’s real estate bubble.
The London-based bank has taken €11.8 billion pounds of impairment charges on Irish loans since the property collapse in 2008, according to Bloomberg News calculations. That equates to about 40 per cent of its peak Irish loan book.
Officials at Brunswick Group LLP, who represent Los Angeles-based Canyon Capital, didn’t return calls seeking comment. Ian Kitts, a Lloyds spokesman, also declined to comment.
Moran Hotels owed €693 million to banks at the end of 2011, latest available filings by Dublin-based TS Taverns Ltd, the group holding company, at Irelands companies office registry show.
The Canyon accord leaves Moran Hotels owing money to Bank of Ireland, Allied Irish Banks, Royal Bank of Scotland Group’s Ulster Bank and the hedge fund, the people said.
The banking syndicate hired accounting firm Grant Thornton Ireland last year to review a five-year business plan for the indebted hotel group, the Sunday Times reported in May. Much of the debt stems from the Tom Moran-led company’s acquisition of the Bewley’s Hotel Group in 2008 from Bert Allen, a director at Slaney Meat Packaging.
Profit per room at Irish hotels has dropped 44 per cent since 2007 and the industry has debts of about €6.7 billion, Galway University economist Alan Ahearne said in October.
The sale of the Moran loans continues Lloyds’s retreat from Ireland. New York-based Blackstone Group, the world’s biggest buyout firm, bought the 501-bedroom Burlington Hotel in Dublin for €67 million in November from Grant Thornton, which was acting for Lloyds. That’s less than a quarter of the €288 million an Irish real estate developer paid in 2007. The same month, Lloyds said it would sell £1.5 billion of Irish commercial real estate loans to New York-based Apollo Global Management for 10 per cent of the face value.
– (Bloomberg)