Hotel value written down by €16m

THE company that operates one of the best known five-star hotels in the country, the Aghadoe Heights in Co Kerry, has written down the value of its property by €16 million.

The write-down is confirmed in accounts just filed by Dalegrove Taverns Ltd for 2009 where the directors confirm that management accounts for 2010 show an operating loss before bank interest and depreciation of €179,870.

This followed the company recording an operating loss of €621,249 in the 12 months to the end of December 2009 and €1 million in 2008. The company had a shareholders’ deficit of €10m at the end of 2009.

The Aghadoe Heights Hotel and Spa is the flagship hotel owned by one of the country’s best known hoteliers and developers, Jerry O’Reilly.

Mr O’Reilly also operates hotels in Kilkenny and Limerick, while the Kerry native is a business partner of developer Bernard McNamara in a number of ventures including the redeveloped five-star Shelbourne Hotel and the Radisson Blu hotel in Galway.

The directors for Dalegrove Taverns Ltd state that the results for 2009 were disappointing and they expect challenging trading conditions in the foreseeable future.

The losses in 2009 include a depreciation cost of €472,893.

The directors state that since 2008, the company has formulated a plan to reduce its cost base and improve its cash flows.

The directors state that the loss recorded in 2010 is consistent with the reduction in trading losses in the 2009 accounts.

The accounts reveal that the company incurred a €16.8m impairment loss on a leasehold property in 2009 after a re-evaluation.

However, the company recorded a pre-tax profit of €3m in 2009 due to a write off of a €20.5m loan due to be paid to O’Reilly parent company, Gamine Trading Ltd. The directors state that “given current economic circumstances, the loan from parent company, Gamine Trading Ltd will not be recovered in the short to medium term and consider it prudent to write off the balance”.

The company had bank loans totalling €11.5m at the end of 2009 and the bank loans are secured by a personal guarantee from director, Jeremiah O’Reilly; a legal charge over the company’s property and a guarantee from lessor, Aghadoe Partnership.

However, the directors reveal that “due to trading difficulties and decreasing levels of parent company support, bank interest on company borrowings has been rolled up since early 2009”.

In 2009, the company paid bank interest payments of €435,870 compared to payments of €805,180 under the same heading in 2008.

The directors said that while no formal agreement is in place, they are confident the company’s bankers will, in the short term, allow bank interest roll up to continue, in order to allow the company to continue to trade and the property to maintain its value as a trading entity.

The company’s bankers have not provided written confirmation of their agreement to continue to roll up of bank interest and as a result, the company’s auditors, O’Neill Foley have not been to able to form in opinion as to whether the financial statements give a true and fair view of the company’s affairs at December 31, 2009. +