Troubled Le Meridien may sell hotel

ONE of Dublin’s landmark hotels, the Shelbourne on St Stephen’s Green, could be under new ownership after the venture capital group that runs its parent company handed control of the group to its creditors.

Le Meridien, which acquired the Shelbourne around two years ago, is being controlled by its banks after its shareholders wrote off their investments in the British-based firm.

The financial problems at Le Meridien had spawned big losses for its backers, including Royal Bank of Scotland and Japan’s Nomura, which backed the acquisition of Le Meridien for £1.9 billion

Le Meridien failed to recover from the slump in tourism after the September 11 attacks, which was compounded by the war in Iraq and the outbreak of the SARS virus.

After breaching its bank covenants, a crunch meeting between the bankers and the hotel chain is scheduled for May 19.

The majority of the economic interest is held by Terra Firma Capital Partners, the private equity firm led by Guy Hands that grew out from Nomura’s Principal Finance Group.

Le Meridien has 140 top of the range hotels in 55 countries.

The rescue of Le Meridien will look at cost cutting and the possibility of selling off further assets. A number of luxury hotels have already been sold off, and although the value of the hotels has fallen, the Shelbourne would be considered a prime asset.

The Shelbourne has applied for planning permission as part of a major expansion, with dozens of new bedrooms expected to be added.

Le Meridien is valued at about £700 million, less than its £1 billion debt.

Le Meridien may be broken up and sold to repay the debt if it can’t secure fresh funds, analysts said.

Bernard Forster, a director of hotel consultant HVS International said: “They’ve got some real quality assets. I would have thought more could be sold.”