Blackstone, Lehman Pair To Buy Le Meridien Hotels: Report

NEW YORK— U.S. private-equity group Blackstone, which owns London’s Savoy hotel group, reportedly is partnering with investment bank Lehman Brothers to buy hotels owned by luxury-tier hotel group Le Meridien. According to London’s The Sunday Times, the two made an approach to Le Meridien’s 14-member senior bank syndicate, which is owed about £740 million (US$1.2 billion). Lehman is one of the largest holders of Le Meridien’s mezzanine debt and faces a substantial write-off on the value of its interest, said the report. The Blackstone/Lehman offer is among three solutions recently proposed to solve Le Meridien’s debt crisis, including its need to meet a quarterly rent bill from its biggest landlord, Royal Bank of Scotland (RBS), by the end of June, said The Sunday Times. RBS, which owns Le Meridien’s top London hotels, including Grosvenor House and the Waldorf, reportedly is against a break-up of the group, and wants the banks to write off some of their loans, according to the report. RBS also has been talking to other hotel groups, including Hilton, Marriott and Accor, with a view to letting them take over management contracts. Such talks were unconfirmed at presstime. The third proposal, which reportedly has met some favor with the banks, is to break up LeMeridien, sell off the assets and use the proceeds to pay down the debt. Le Meridien owns almost 140 hotels, with the greatest concentration in Europe, where it runs a 40 hotels. This compares with 13 in the Americas, 20 in Britain and Ireland, about 30 in east Africa and the Indian Ocean and 20 in the Middle East and west Africa. SOURCE: The Sunday Times