Credit Suisse sells debt of QMH

CREDIT SUISSE, formerly one of the banks on Queen's Moat Houses' credit committee, has sold all its debt in the secondary market for a price understood to be only 17 per cent of face value, writes Rupert Bruce.

Credit Suisse was one of 21 banks on the struggling hotel chain's pounds 415m multiple facility, which has very weak security.

Discussions to sell the other class of debt, a DM550m revolving credit facility, which has better security, are said to be taking place with buyers interested at between 50 and 60 per cent of face. The mortgage debentures, which are backed by 27 properties, are in demand at between 75 and 80 per cent of face.

QMH and its 65 banks are locked in a pounds 1.3bn refinancing negotiation, the details of which may not be finalised until next April, according to Stanley Metcalfe, chairman.

The group is not paying interest on pounds 800m of its debt. Mr Metcalfe has warned shareholders that there will have to be a significant reduction in debt and a further significant amount will have to become non-interest bearing. He has given no indication of the size of the debt-equity swap nor of the dilution of shareholders.

A standstill agreement with the banks expires at the end of January, but Mr Metcalfe said at November's annual shareholders' meeting that he hoped to extend it. At one point QMH hoped to have reached agreement by then.