US group may take Maybourne hotels stake

A US private equity company has emerged as a possible bidder for a stake in Maybourne, the London hotel company at the centre of the legal challenge that developer Paddy McKillen has taken against State assets agency Nama.

New York-based Northwood Investors is understood to be interested in taking a €230 million stake in Maybourne, owner of three upmarket hotels – Claridges, the Berkeley and the Connaught – in the English capital.

Maybourne’s shareholders include developer Mr McKillen and property investor Derek Quinlan, who put together the original deal to buy the hotels on behalf of a group of Irish backers six years ago.

The company has been working on refinancing close to €700 million of bank debt which is due in December.

Northwood is led by US businessman John Kukral, who worked with private equity house Blackstone when it sold the three hotels, along with the Savoy, to Quinlan for close to €1 billion.

Mr Kukral is believed to have been against the sale at the time, and sources said yesterday that he sees the company’s efforts to refinance as an opportunity to get involved with the properties again.

The High Court is due to rule on Monday on a case taken by Mr McKillen challenging Nama’s right to buy €2.1 billion of his property loans from five Irish banks, including Anglo Irish and Bank of Ireland. Part of the debt relates to Mr McKillen’s holding in Maybourne. His argument is based on the fact that his loans are performing – ie, that interest and other repayments are being met.

The case is based on debts originally owed to Bank of Ireland but has implications for liabilities to four other Irish lenders.

Maybourne said in a statement yesterday that the refinancing of the hotels’ debt was in the final stages and would be resolved ahead of the December deadline.

It added that reports that the group was for sale were untrue and pointed out that the hotels were performing exceptionally well. The company refused to make any comment beyond that.

Some reports yesterday indicated that Northwood and Maybourne have begun exclusive talks, a sign that a deal is imminent, but it was not possible to confirm this last night. Earlier this week, another New York-based investor, Westbrook Partners, was said to be in talks to take a stake in Maybourne.

Mr McKillen developed the Jervis Street shopping mall in Dublin and is a shareholder in the city’s Clarence Hotel along with members of U2. He had a small stake in the consortium that Mr Quinlan put together to buy the four London hotels in 2004. The group subsequently sold the Savoy to the under bidder, Saudi prince Alwaleed Bin Talal, for €300 million. Mr McKillen afterwards raised his holding in the group. Mr Quinlan has since left the property investment company he set up.