Rocco Forte has held crisis talks with its lender HBOS after it breached lending agreements on a £300m loan that threatened to sink the luxury hotel chain.
HBOS, part of Lloyds Banking Group, has agreed to extend the loan pending a long-term solution.
The crisis arose after Uberior, a holding company that owns seven of Rocco Forte’s 13 hotels, breached key lending agreements with the bank.
Included among the seven hotel is the upmarket Brown’s hotel in London, a once favourite haunt of Agatha Christie.
The holding company Uberior is jointly owned by Forte’s RF Hotels and partner Halifax Bank of Scotland, now part of Lloyds Banking Group.
HBOS also loaned £300m to Forte with around £200m being placed in the joint venture, and the remaining £100m in RF Hotels.
It has emerged that Uberior has defaulted on its banking covenants after missing targets linked to cashflow and profits set during the boom years.
Hotelier Rocco Forte set up RF Hotels after losing control of the original Forte family hotel empire.
RF Hotels itself has not breached any banking covenants. However the chain has seen profits and sales hit by the economic downturn as its wealthy clients cut back on luxury expenditure and business executives have downsized to budget accommodation.
Forte has been given an 18-month loan extension but will have to pay a penalty of higher interest rates.
Forte is in separate talks with Italian bank UniCredito over its £80m loan to finance a new golf and spa resort in Sicily.
The Verdura resort is due to reopen in March after being shut last year due to a lack of bookings.