Tuesday 22 August 2017

Capel owners seek terms relief on loan for struggling golf hotel

John Mulligan

John Mulligan

THE owners of a north Dublin hotel and golf links acquired for up to €70m five years ago with a view to a major land swap are attempting to renegotiate financial terms with lenders, including Bank of Scotland (Ireland), to ensure the struggling property can continue to operate.

The Portmarnock Hotel & Golf Links -- not to be confused with the much older Portmarnock Golf Club -- was bought by the owners of Capel Developments in 2005 after stiff competition for the premises from rival developer Gerry Gannon, as well as Treasury Holdings.

The original guide price for the hotel was around €35m, but it was sold for up to twice that. The estimated net realisable value of the hotel operation was just €22m at the end of 2008.

Liam Kelly, John O'Connor and Edward Keegan -- the owners of Capel Developments -- set about spending roughly €10m renovating the hotel and adding a new spa centre.

It has since gone on to host events such as the AIB-backed Ladies Irish Open as well as legs of golf competitions that were sponsored by Anglo Irish Bank.

But the hotel has been racking up losses and was put up for sale in 2007. Accounts just filed for Natworth, the immediate controlling entity of the business, show that it made an operating loss of almost €1m in 2008. The value of the hotel and golf course was also written down by €2.8m that year.

It made a €408,000 loss in 2007. In 2008, turnover fell to just under €5.8m from nearly €6.4m. Directors state in the accounts they are "satisfied" with the performance. There was a shareholders' deficit of €966,000 at the end of 2008.

At the height of the property boom in 2007, Capel Developments offered about €110m in cash and other assets to Clontarf golf club in Dublin as part of a proposed deal where that golf club would be moved to Portmarnock. Capel would then have gained control of the land at Clontarf where it hoped to build houses.

Capel was offering €80m in cash to Clontarf golf club, with €60m earmarked for its members.

Full members were in line for a windfall of €100,000 each. Capel was also going to build additional facilities, including a club house, at Portmarnock.

Clontarf golf club members backed the deal, but the offer was pulled by Capel in 2008 as the downturn took hold.

Capel Developments posted a €43.5m loss in the year to the end of February 2008.

Irish Independent

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