Buckingham reduces debt with sale of Texas hotel: Sheraton Grand sold to life assurance company for nearly pounds 12m

BUCKINGHAM International, the troubled hotels group, has raised nearly pounds 12m through selling the Sheraton Grand Hotel in Houston, Texas.

Buckingham is under notice from its bankers to reduce debts which totalled pounds 98m in February.

Yesterday's deal brings borrowing down to pounds 72m. It sold a nursing home subsidiary and a hotel in Portugal in March for pounds 14m.

John Clark, the chief executive, said: 'This further disposal demonstrates the group's success in implementing the support plan as agreed with the banks.'

The Sheraton Grand, a four-star hotel, has been bought by Lincoln National Life Assurance. It made operating profits of dollars 1.4m ( pounds 900,000) in the year to October.

However, debt still far outweighs Buckingham's asset base. Write-downs at the beginning of this year cut the company's assets from pounds 113m to pounds 3m.

Last week the High Court ordered Buckingham to pay pounds 3.7m in deferred consideration to the vendors of a company it bought in 1987.

Steve Smith, finance director, said money raised from yesterday's sale would not be used to settle the case.

He indicated that the company would appeal against the ruling.

Mr Smith emphasised that the disputed deferred consideration related to an acquisition completed before the present management team was appointed. In addition the company, World Wide Dryers, has since been sold.

Buckingham's hotels are all overseas. It still has four in Amsterdam, four in Portugal, six in Orlando, Florida, and two in San Antonio, California. It also owns a plot of land with development potential in Lisbon.

'We are fighting for survival at the moment,' Mr Smith said. 'But if we manage to get the debt down and achieve the hoped-for reconstruction of our finances we will stay with the hotel business.'

Buckingham shares were unchanged at 2.25p.