De Vere owner completes £650m debt restructure with bank
The Alternative Hotel Group (AHG) which operates De Vere Hotels and Resorts and Village Hotels and Leisure, has successfully completed a £650m debt-for-equity swap with the Bank of Scotland (BoS).
As a result of the debt restructuring negotiations, BoS will swap about £650m of debt in the hotel company for preference shares and cut AHG's debt from £1.7b to just over £1b. AHG's banking facilities will also be extended by two years to December 2013.
Led by chief executive Richard Balfour-Lynn, AHG's management team retains its 50% equity stake in the business, with the other half held by the bank.
Balfour-Lynn said the restructure has been necessary because of the 28% fall in value of its properties, which include 13 De Vere Hotels and Resorts, 22 Village Hotels and Leisure and 29 De Venues conference and training facilities, over the past two years.
AHG also operates Greens Health and Fitness, a 15-strong chain of health and fitness clubs, G & J Greenalls white spirit distiller, and Searcys catering company.
The refinancing of AHG, which includes prestigious properties Cameron House on Loch Lomond and the Grand in Brighton within its De Vere Hotels and Resorts portfolio, will now allow the company to continue its plans for expansion.
"The obvious area for growth is Village Hotels, which traded well during the down turn," said Balfour-Lynn. "Ultimately I see this reaching a brand of around 50 hotels, with three to four hotels opening each year over the next few years. We shall also be continuing with the refurbishment of De Vere Hotels, which we are currently half way through."
Village Hotels and Leisure has recently opened new-build properties in Ashton Moss, South Leeds, Elstree, Farnborough and Solihull. Each hotel typically comprises 125 bedrooms, a grill restaurant, pub, Starbucks coffee shop and health and fitness club.
Balfour-Lynn said that, despite outperforming many of its competitors, last year had seen turnover in its hotels dropping by between nine and 18%.
"There is no question that we are seeing a pick up in corporate demand, but with the General Election, cuts in public expenditure and expected increases in personal taxation, I am very cautious about the rest of this year," he said. "The next 12 months will be bumpy and I believe there will be no significant improvement until the end of 2011."
AHG has also announced the appointment of Andrew Coppell, who was chief executive of Queens Moat Houses from 1993 until 2003, as chairman.
Alternative Hotel Group closes De Vere HQ >>
De Vere restructures its team >>
De Vere owner denies debt-for-equity swap rumours >>
By Janet Harmer
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