Bankers cool on QMH plan: Slide in price of hotel group's debt prompts fears of liquidation

QUEENS MOAT Houses' proposals for a rescue restructuring have had a poor reception from bankers, triggering a slide in the price of the company's bank debt and prompting one bank to break ranks and sell its debt.

According to traders in the secondary debt market, the price of QMH debt has fallen by up to 20 per cent since plans for a debt-for-equity swap were posted to bankers a week ago.

One fear is that prices have fallen so far that US vulture funds, which make a turn by buying into sick companies, may be tempted to buy the debt and force the heavily indebted hotel group into liquidation.

In a study prepared for the banks last year, the accountants Grant Thornton concluded that QMH's revolving credit facility class of debt would be worth 55p in the pound in a liquidation, and the multiple option facility would be worth 20p.

One bank's revolving credit facility debt is said to have traded at 45p in the last week, and US vulture funds are prepared to pay 35p. The other facility is said to be quoted at around 17p.

A banking source said the disquiet was caused by opportunistic US investors, who had bought the debt at higher prices than presently rule. 'US secondary debt traders appear worried about the price of the debt they bought, as they did not understand the nature of the beast,' the source said. 'Those hoping for a short-term profit appear to have been caught out.'

The US bank, Bankers Trust, reportedly bought some of the revolving credit facility at about 60p. It is unclear, however, whether this was for its own book or for a client.

QMH's management, headed by chief executive Andrew Coppel, has constantly fought to prevent the company's debt from trading while it was restructuring the group. But two members of the eight- strong steering committee - Credit Suisse and Royal Bank of Scotland - have done so, sparking an angry reaction from the joint co-ordinators, Barclays and National Westminster.

The management has been more successful in stopping trade in its mortgage debenture stock. A fall in the value of the hotels has triggered a clause that means 25 per cent of the mortgage debenture holders could enforce the security they have on some of the prime properties.

But the big stakes are held by UK investment management houses, none of which has sold so far, in spite of offers from arbitrageurs. However, QMH has accepted offers on three of the 14 hotels it put on the market. There is also said to be interest in some of the others.

QMH shares were suspended at 47.5p on 31 March last year. They are now considered worthless.

(Photograph omitted)

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Written protest: Julia Donaldson, author of The Gruffalo, has sent an open letter to the Culture Secretary
books
Arts and Entertainment
The teaser trailer has provoked more questions than answers
filmBut what is Bond's 'secret' that Moneypenny is talking about?
Sport
Lewis Hamilton secured his second straight pole of the season
f1Vettel beats Rosberg into third after thunderstorm delays qualifying
ebooks
ebooksA special investigation by Andy McSmith
News
Johnny Depp is perhaps best known for his role as Jack Sparrow in Pirates of the Caribbean
peopleBut how did he break it?
Sport
footballDoes Hodgson's England team have an identity yet?
Travel
travel Dreamland Margate, Britain’s oldest amusement park, is set to reopen
News
news
News
Founders James Brown and Tim Southwell with a mock-up of the first ever ‘Loaded’ magazine in 1994
media
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss