Thursday 21 November 2019

Jurys Inn leaves Irish hands but Lone Star secures future

Jurys Inn employs about 2,000 people and operates 7,000 rooms
Jurys Inn employs about 2,000 people and operates 7,000 rooms

Peter Flanagan

THe Jurys Inn hotel chain has finally left Irish ownership following the completion of a takeover by US investment firm Lone Star.

The €910m deal closed yesterday, three days after the Irish Independent reported that the two sides were in talks.

It gives Lone Star control of 31 hotels, 7,000 rooms and 2,000 staff across Ireland, the UK and Czech Republic.

Importantly, Lone Star is taking over the business as a going concern, and is "committed to the growth and development of the business", according to Jurys Inn chief executive John Brennan.

It also closes yet another chapter in the sorry saga of deal making that went on during the Celtic Tiger years.

The business was controlled by the Doyle Hotel Group from when the "Jurys Inn" brand first appeared in the early 1990s. The Jurys name, of courses, traces its lineage back to the 19th Century and was used brilliantly by legendary hotelier PV Doyle in the 1960s and '70s.

By 2007, the Jurys Inn range of mid-market hotels was highly successful, and had gained the attention of financier Derek Quinlan.

Mr Quinlan put together a deal to take over the business for more than €1.1bn - a colossal sum even at that time when one blockbuster deal seemed to follow another.

Crucially though, the deal was almost entirely financed by debt, most of which had been provided by a consortium of Royal Bank of Scotland, Anglo Irish Bank, and Allied Irish Banks.

The Oman Investment Fund bought a 50pc stake in the business in 2008, but with debts approaching £650m (€833m) it was perhaps inevitable that once the global economy crashed, the Jurys Inn business began to struggle mightily.

By 2012 rumours were rife in the market that Royal Bank of Scotland was looking at converting some of its debts into equity and debt writedown of some kind was on the table.

That finally happened in 2013. A consortium of the Oman Investment Fund, US investor Mount Kellett Capital Management and Avestus Capital Partners (the former Quinlan Private), as well as Ulster Bank and Westmont Hospitality Group injected £120m into the business, and the banks wrote down the company's debts by nearly £280m.

That got Jurys Inns debt to a more manageable £250m and set the scene for a sale later this year.

However Lone Star pre-empted that process with its approach.

The deal secures Lone Star's place as one of the biggest investors in Ireland and Irish-related assets since the crash.

The Texas-based firm specialises in so-called distressed asset purchases and turning them for a profit.

It paid around €4.7bn for the IBRC loan portfolios Project Rock and Project Salt in 2014.

It also bought €540m worth of mortgages from Investec's Start Mortgages last November.

Irish Independent

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