Business Irish

Monday 27 January 2020

Barclays blocked upgrade of hotels, claims McKillen

Belfast developer Paddy McKillen leaving The Rolls Building at the High Court in central
London
Belfast developer Paddy McKillen leaving The Rolls Building at the High Court in central London

Shane Hickey

The Barclay brothers blocked developments on a group of high-end London hotels as part of an attempt to frustrate developer Paddy McKillen even though the changes were in the best interests of the business, it has been claimed.

The Belfast-born developer yesterday said that a group of directors, appointed by David and Frederick Barclay, stalled an attempt to redevelop Claridge's and the Berkeley.

Mr McKillen is suing the brothers over their attempts to take over the company which owns the two hotels and the Connaught.

He has claimed the Barclays, who own the 'Telegraph' titles and the Ritz hotel, have acted in a manner that was "prejudicial to his interest as a shareholder" in Coroin, a company he helped establish in 2004 to buy the hotels.

On the fourth day of his High Court action yesterday, details were heard of how three directors appointed by the Barclays to the board of Coroin -- Richard Faber, Michael Seal and Rigel Mowatt -- are said to have tried to block the upgrade work.

In a witness statement, Mr McKillen said the approach, which stalled the building of a pool and spa in Claridges' basement and work to the facade of the Berkeley hotel, worked against the best interests of the hotels.

"My concern is that Mr Faber, Mr Seal and Mr Mowatt are attempting to block the redevelopment to frustrate me personally and to make it clear that I do not have operational control, and that the steps that I would like to take are not going to happen while I am around," his statement said.

He said that there had been a development meeting about the projects in April of last year and Aidan Barclay, David Barclay's son, had been impressed with the potential profitability of the project. When questioned on the matter under cross-examination yesterday, Mr McKillen said the Barclay brothers had blocked the two developments.

He said the company had the cash in the bank to develop the hotels, which would increase the value of the Berkeley by between stg£85m (€102m) and £128m and Claridge's by between £173m and £238m.

Joe Smouha, counsel for the three Barclay directors, said he had created an issue with which to attack the brothers, a charge which was rejected by Mr McKillen.

The Irish businessman owns 36pc of the stg£1bn company while the Barclays have 64pc, having acquired the debt secured on investor Derek Quinlan's shareholding from the National Asset Management Agency (NAMA) to add to their existing shareholding last year.

Mr McKillen is claiming Mr Quinlan's 35pc stake should have been offered to him under a clause in the shareholders' agreement of the company. He now wants a court ruling that he has the right to buy the remaining shares in Maybourne Finance Ltd, the holding company the Barclay brothers used to buy them from NAMA.

The case is expected to continue this morning.

Irish Independent

Also in Business