Thursday 27 July 2017

McKillen triumphs as the Barclays exit hotels

Developer vindicated as billionaires end long-running dispute

The luxurious Claridges Lobby
The luxurious Claridges Lobby
Sutherland Suite in the infamous Claridges hotel
The Piano Suite in Claridges by DVF
Patrick McKillen (pictured), has 'triumphed' Sir David Barclay and his brother, Sir Frederick
Derek Quinlan is pictured
Sir David (left) and Sir Frederick Barclay
The Connaught Hotel in London
The Berkely Hotel in London
Peter Flanagan

Peter Flanagan

Belfast developer Patrick McKillen's battle for three of the most exclusive hotels in London appeared to end in victory yesterday, after his rivals the billionaire Barclay brothers and financier Derek Quinlan sold their interest in them.

The Barclays have offloaded their interest in the company behind Claridges, The Berkeley and The Connaught hotels to Qatar's Constellation Hotels Group.

The move brings to an end the Barclay brothers' interest in the hotels and ends what had been one of the most bitter disputes in business over the past four years. In a statement, a spokesman for David and Frederick Barclay confirmed that they and Mr Quinlan had ended their interest in Maybourne Hotel Group, which owns the hotels.

"We are pleased to have concluded this transaction and that Maybourne Hotel Group is now majority controlled by Constellation Hotels Group. "We have also reached an agreement to ensure an end to any litigation related to Maybourne Hotel Group so that there is a clear focus on investing in the continued success of these iconic hotels," he added.

A spokesman for Mr McKillen confirmed the sale.

Terms of the sale were not revealed. Last month the Abu Dhabi Investment Authority reportedly bid £1.4bn (€2.2bn) for the hotels. At that price, the Barclays and McKillen interest would be worth about €1.4bn.

Both sides are likely to claim victory. Mr McKillen is known to have a good relationship with the Qataris and can move forward with renovations at the hotels, while the Barclays and Mr Quinlan have made a huge profit on their investment.

The battle for the hotels has become almost a parable of the optimism of the Celtic Tiger and the recriminations of the bust. It has captivated the business world and dragged in figures from business and politics.

In 2004, Mr Quinlan and investors including Mr McKillen forked out £750m for the three hotels, as well as The Savoy Hotel in central London. The deal had been financed by Anglo Irish Bank.

The news stunned the market and catapulted the two men to the top table of the London property market. They had outbid the likes of a Saudi prince.The hotels were controlled by a new company - Coroin Ltd - which owned Maybourne Hotel Group. Mr Quinlan owned close to a third of the business, as did Mr McKillen.

The remainder was split among a number of investors, including the family of UK businessman Philip Green, which were held by trust.

Coroin quickly sold the Savoy Hotel but by 2009, Mr Quinlan was in trouble as the financial crisis enveloped Ireland. It was then that the Barclays came into the picture. They are reported to have advanced him a loan, and in return Mr Quinlan promised to notify them if he intended to sell his shares in the hotels.

In January 2011, the Barclays bought the Green family trust. At about the same time, Mr Quinlan signed over control of his Coroin stake to the Barclays, but not actual ownership of them - a crucial distinction.

Later that year, Nama, which had taken over the hotel group's loans from Anglo, sold those loans to the Barclay brothers.

Debts

Mr McKillen went to court repeatedly to prove that Mr Quinlan could not hand control of his stake to the Barclays. When the UK courts eventually ruled against him in 2012, it looked like the final straw. Mr McKillen and his businesses owed Anglo - now renamed IBRC - hundreds of millions of euro, and it seemed only a matter of time before the Barclays would buy him out of the hotels.

Mr McKillen needed a white knight, and US hedge fund Colony Capital fitted the bill.

Colony, along with another firm, had sold the hotels to Coroin in 2004. Now they cleared Mr McKillen's debts with IBRC and helped him keep his stake in the hotels.

The dispute was now in a stalemate. Yesterday's deal would appear to be the end of this chapter in the Celtic Tiger and its fallout.

Timeline of dispute 

2004: Financier Derek Quinlan and a group of investors buy the Savoy Hotel Group for £750m through a company called Coroin. The hotels are The Savoy, Claridges, The Connaught and The Berkeley. Investors include Mr Quinlan, Paddy McKillen and the Green family. The Greens have bought their shares through a trust named Misland. The loans for the hotel are made by Anglo Irish Bank (later IBRC).

2005: Coroin sell The Savoy Hotel to Prince Al-Waleed Bin Talal of Saudi Arabia.

2005: The company controlling the three remaining hotels is renamed Maybourne Hotels.

2010: Mr Quinlan agrees to notify the Barclay brothers if he decides to sell his shares in Coroin.

2010-11: The loans tied to the hotels have been transferred from Anglo to Nama.

2011: The Barclays buy Misland and claim to control Coroin as they effectively control Mr Quinlan's stake in the company as well.

2011: Mr McKillen successfully prevents his own loans with IBRC being transferred to Nama.

2011: Nama sells loans tied to Maybourne Hotels to the Barclays.

2012: High Court in London rules in favour of the Barclays' claim that the transfer of control of Mr Quinlan's stake to them was legal. Mr McKillen appeals.

2013: UK court of appeal rules against Mr McKillen.

2014: Mr McKillen repays his debts to IBRC with the backing of US investment firm Colony Capital.

2015: Abu Dhabi Investment Authority reported to be planning a £1.6bn (€2.2bn) bid for the Maybourne Hotel Group.

2015: The Barclay brothers along with Mr Quinlan sell their interest in Coroin to Qatar's Constellation Hotels Group.

Irish Independent

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