LENDERS AIB, IBRC and Ulster Bank have agreed to a dramatic debt write-off of £280m (€328m) of debt for Jurys Inn.
The deal is aimed at securing the future of one of the best known hotel chains in Ireland.
Under the new rescue plan, the group has secured new investment from a syndicate made up of Oman Investment Fund, the US investment funds Mount Kellett Capital Management and Avestus Capital Partners, as well as Ulster Bank and Westmont Hospitality Group, one of North America's largest privately owned specialist hotel investors.
They will invest about £120m (€140.7m) in new equity into the business while the bank debt has been "restructured and extended".
Jury's Inn, which has 32 hotels throughout Britain and Ireland as well as the Czech Republic, said yesterday it had "completed a financial restructuring which will accelerate the future growth and development of the group".
Businessman Derek Quinlan's private equity firm bought the company from the Doyle family with loans of more than £600m in 2007.
However, after the bust took hold, Royal Bank of Scotland took over the business. It has retained its interest in the business through Ulster Bank.
Ulster Bank is converting some of the debt it is owned into a stake in the company.
The company would not comment on the terms of the restructuring, but it is estimated the group will have debts of some £250m after the agreement.
That implies that Jurys banks – IBRC, Ulster Bank and AIB – have accepted a write-down of some £280m on what they are owed.
Before the deal, Jurys Inn had debts of some £650m. Debt write-downs are common in the business world, with banks usually preferring to have at least part of what they are owed paid back, rather than put a company out of business altogether.
While the company has been profitable for the past three years at an operating level, the debt wiped out any gains by the business. In 2011 the group posted operating profits of £33.4m, an increase of 4pc, on revenue that grew 6pc to £147.5m. That trend is believed to have continued in 2012.
Company chief financial office Cormac O Tighearnaigh said the restructuring was vital to the long-term stability of the business
"The support of our lenders was critical to the success of this restructuring and it leaves Jurys Inn with a strong balance sheet and the long-term funding to capitalise on opportunities across our existing portfolio of hotels as well as pursuing new opportunities," he said.
Mount Kellet is a low-profile hedge fund but its principal Mark McGoldrick earned notoriety in 2006 when he walked out on his then employer Goldman Sachs. Nicknamed 'Goldfinger' for the amount of profits his team brought into the firm, he quit the Wall Street giant over his $70m pay packet, claiming it was too low.