Monday 18 December 2017

Irish investors' millions at risk in hotel rescue plan

John Mulligan

John Mulligan

A number of high-profile Irish investors, including former AIB chairman Dan O'Connor, will see their multimillion-euro investment in a troubled UK hotel chain obliterated if the latest talks to save the business come to fruition.

Bank of Ireland will also write off millions of pounds in debt to the group if a plan that could see pan-European private equity outfit Patron Capital and Royal Bank of Scotland's West Register firm invest up to £50m (€57m) to rescue the hotel group is sealed.

The two firms would then control the hotel chain.

The struggling Jarvis Hotel group, which operates 40 properties around Britain, has been fighting for survival for the past two years.

The rumoured deal would result in Bank of Ireland and HSBC ending their association with the hotel group, which could see its bank debt almost halved to £60m (€68m).

The business was acquired in 1990 by its current chairman, John Jarvis, who later floated the company but then took it private in a 2003 deal worth £229m (€250m at the time).

That buyout was backed by Dublin-based Lioncourt Capital, which was founded by Michael Tunney and David Andrews, using a vehicle called Kayterm.

Among those who stumped up for a slice of the action was Mr O'Connor, who was appointed chairman of Allied Irish Banks in 2009 and stepped down last October.

Others who originally took part in the scheme were: former Irish Life & Permanent director Peter Leadbetter; Avoca Hand-weavers' Simon Pratt; former 'Kilkenny People' owner Kerry Keane; and Unicare pharmacy chain owner Fergus Hoban. Some shares in Kayterm are now listed as being owned by Orna Hoban.

Kealan Lennon, formerly of investment group Boundary Capital and one-time chief executive of the Panther Group, is also a shareholder.

Mr Tunney and Mr Andrews of Lioncourt between them own about 16pc of Kayterm. Neither was contactable for comment yesterday. The chief executive of Jarvis, Stephen Hebborn, was also uncontactable.

IBI Corporate Finance had been appointed to find a buyer for Jarvis Hotels back in 2005 with a price tag that could have resulted in a multimillion-euro return for investors. A number of hotels in the original portfolio had already been sold. The sale process was halted.

Kayterm posted a £23.8m (€27.2m) loss in the financial year to the end of last March, on top of a £9.6m (€11m) loss the previous year.

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