The Alterntive Hotel Group, the chain behind some of Britain’s most prestigious hotels including Cameron House in Scotland and the De Vere chain, is entering talks about a restructuring of its £1.4 billion debt.
The chain is beginning negotiations with its lender Lloyds Banking Group after the bank appointed the accountants Deloitte to carry out an independent review of the business, amid concerns that AHG would be unable to meet its debt terms.
According to The Times, shareholders, including AHG’s founder, Richard Balfour-Lynn, are unwilling to invest more money into the business. Lloyds is considering a massive debt-for-equity swap, which would wipe out existing investors.
Sources told The Times that the core business is stable but that the debt structure needs to be reorganised due to the drop a slump in demand.
As well as the 42-hotel De Vere chain, AHG also owns Village Hotels & Leisure Clubs and the Greens gym chain.
AHG acquired De Vere when Balfour-Lynn took the business private in 2006 for just over £1 billion, including about £300m of borrowings. Several months earlier AHG paid £325m to buy a conference business from Rentokil.
The AHG deal is one of a number of loan agreements Lloyds inherited from the corporate lending arm of HBOS, headed by Peter Cummings, which made about £10 billion of bad-debt charges in the first six months of the year.