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Financier Guy Hands Seeking to Work Out Rescue Package for His Debt-laden Le Meridien
Hotels Group
Evening Standard, London
Knight Ridder/Tribune Business News 

May 18, 2003 - Millionaire financier Guy Hands is today meeting bankers to thrash out a rescue package for his debt-laden Le Meridien hotels group in a move that could see a rival hotelier step in to run parts of the struggling chain. 

Hands, for years the City's golden boy and kingpin dealmaker, has already written off the UKpound 213 million investment he made in the upmarket hotelier when he was at the Japanese bank Nomura. 

Stakes held by Royal Bank of Scotland, Abbey National and Alchemy Partners have also been written down to nothing, effectively leaving its bankers, carrying UKpound 1 billion of debt, in charge. 

Industry sources have ruled out earlier speculation that international hoteliers would launch a takeover of the group. 

But it now seems increasingly likely that parts of the 140-strong chain, which takes in the Grosvenor House and the Waldorf hotels, could be operated by other players under management contracts. 

Hilton, Accor of France and Marriott are seen as front-runners for such contracts, which would see them running the hotels on behalf of the banks in return for a fee. 

A deadline of Monday has been set for a decision for the group, but that could be extended by another month. 

An alternative to the break-up of management contracts could be that the lending banks, including Lehman Brothers, CIBC and Merrill Lynch, accept a debt-for-equity swap that would leave them owning the business. 

Some stakeholders in the complex Le Meridien group are still thought to favour keeping the company in one piece. 

Le Meridien missed its January repayment to its senior lending banks but has since repaid the outstanding installment by selling three British hotels. 

It has not yet missed a repayment to Royal Bank of Scotland, which owns the 12 properties in London under a sale-and-leaseback arrangement. 

As part of the RBS contract, if Le Meridien does fall in breach of its payments, it has the right to insist a third party, such as Hilton, takes over the management. 

Hilton is seen as a likely candidate for the London hotels, given its existing strong presence in the capital and British origins, although other hotels could be run by rivals. 

Le Meridien's new chief executive Stephen Alexander has been holding meetings with the various parties all week to decide on the future path for the group. The hotels' team of consultants Deloitte & Touche has also been drafted in to help. 

-----To see more of the Evening Standard, or to subscribe to the newspaper, go to http://www.thisislondon.co.uk 

UKpound preceding a numeral refers to the United Kingdom's pound sterling.

(c) 2003, Evening Standard, London. Distributed by Knight Ridder/Tribune Business News. RBOS, ANL, HLT, AC, MAR, LEH, MER, 


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