Friday 24 March 2017

Barclays have major firepower in Maybourne hotel battle

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The multi-millionaires Sir David Barclay (left) and his twin brother Sir Frederick after receiving their knighthoods
The multi-millionaires Sir David Barclay (left) and his twin brother Sir Frederick after receiving their knighthoods

Emmet Oliver Deputy Business Editor

WITH estimated net worth of £2.2bn (€2.64bn), the reclusive Barclay brothers -- owners of the Telegraph newspaper group and the Ritz -- would seem to be in the strongest position in the battle for control of London's most celebrated hotel group, Maybourne Hotels.

This group, which owns the Connaught, Claridges and the Berkeley, is now very much split between the Barclays, who control, directly and indirectly, 64pc of the shares, and Irish developer Paddy McKillen, who controls 36pc.

Mr McKillen has said previously through a spokeswoman that he regards David and Frederick Barclay's conduct over the last few months as an "old-style corporate raid" and he has claimed that his minority rights in the business have been suppressed.

The trigger for these comments was a transaction earlier this year when NAMA sold €800m of debt it has on the hotels to the Barclay brothers (who control a company called Maybourne Finance).

This has sparked several legal disputes between Mr McKillen and his companies, and the Barclays.

The first of these was the purchase by the Barclays of shares in the Maybourne hotel group earlier this year from another smaller shareholder, Manchester businessman Peter Green.

Yesterday, a judge found that no pre-emption provisions had been triggered by the sale of these shares in January 2011, an outcome which was warmly welcomed by a spokesman for the Barclays.

However, other more substantive legal cases between the two sides have yet to be adjudicated upon. ''There is a long way to go,'' said the spokesman.

The spokesman for the Barclays has asserted that all this litigation is bad for the business as it creates ''uncertainty''.

Speaking exclusively to the Irish Independent yesterday, he asserted: ''Nobody wants to litigate, but we are confident of our case."

He pointed out that the Barclays found it hard to understand the Irish developer's strategy in relation to the London hotels, which are owned by a company called Coroin.

"We believe Mr McKillen is simply delaying the inevitable," said the spokesman.

He said NAMA had made it clear it did not want to own the debt on the hotels and if Mr McKillen won the day, the debt would simply revert to NAMA, which had no interest in holding these loans.

''I can't see how that all plays out," said the spokesman. The reason financial resources are important is that the Barclays appear to be willing to invest fresh money in the hotel group via a rights issue.

The spokesman also said Coroin had written to them about this issue and independent financial advice was also being sought on the matter.

''We would be willing to subscribe up to £200m and in that way the group wouldn't have to sell any of its hotels,'' said the spokesman.

However, he conceded that a rights issue would appear to be parked while various legal issues are adjudicated upon in London.

The spokesman agreed that Mr McKillen could continue to be a shareholder and that nobody was contesting that. But crucially, a wider issue was at stake, he warned.

''How do you move a business that owns three lovely hotels forward?'' he asked.

He said that if Mr McKillen was interested in developing the business he should take up his rights in any rights issue.

The key problem was the business had too much debt on it and it needed to be restored to an ''even keel''.

''Hotels like these need investment," said the spokesman. ''Our position is the sooner this company can address its indebtedness the better, cap-ex is needed every year."

The spokesman said there was ''nothing unfair" about a rights issue being used to put extra money into the business.

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