QMH rolls out reshape

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The Independent Online
Queens Moat Houses yesterday rolled out restructuring proposals, 19 months after share dealings were suspended at 47.5p because of severe financial problems at the hotel group.

The complicated proposals mean that ordinary shareholders will end up with 40 per cent of an enlarged equity base and that all the £1.2bn of debts will be rescheduled, giving the company breathing space until July 1996 before it has to pay interest charges. All accrued interest charges to date have been waived or written off by lenders.

If the restructuring is approved, Queens' balance sheet will sport £200m of term debt, which expires in 2000 and carries interest of Libor plus 1.575 per cent; £216m of junior debt, due in 2006 and with an interest rate of 7.5 per cent, and £97m of junior convertible debt, due in 2008.

Another £200m of debt is planned to be converted into equity, and a total of £199m of two classes of preference stock will be converted into ordinary shares at three times the original conversion terms. If successful, Queens then intends to consolidate the ordinary capital on a one-for-10 basis.

Barclays and National Westminster, the lead banks and joint co-ordinators of the Queens Moat lender group, which represents 55 per cent of the debts, said they were "pleased" with the progress. A Barclays spokesman added: "We are confident that this reconstruction can be completed."

The proposals will also include plans to start a share option scheme for executive directors and other management. No allotment of shares has yet been decided. Any decision on allocation is at the sole behest of the remuneration committee.

Andrew Coppel, chief executive, said yesterday: "We believe the restructuring is a good deal. And on trading we are making progress in the UK, and the Netherlands is in line with expectations. Germany and France, however, continue to suffer from downwardpressure on room rates.

"I expect to be able to report a solid improvement in operating profits for 1994, which in 1993 were £18m."

However, Mr Coppel and his fellow directors, including Stanley Metcalfe, the chairman, look set to face some tough questioning at the company's annual meeting next Wednesday.

Some shareholders are planning to call for an adjournment of the meeting, at which the company intends to consider approval of the report and accounts, the re-election of auditors and directors, but not the restructuring proposals.

Alan Reed, solicitor for David Bairstow , the former chairman of Queens, will call for the meeting to be adjourned because he believes that shareholders will not be in a position to re-elect the directors because they have not had enough time to considerthe restructuring proposals.

Mr Reed is a senior partner with the Bennett Metcalfe law firm in Bristol, is a shareholder and also looks after some trusts with shares in Queens Moat.

"It seems to me that the re-election of the board should be inextricably linked to the restructuring of the company. The timing of the meeting is putting shareholders in a very difficult position.

"Shareholders may, or may not want the same board of directors. It therefore seems appropriate that the meeting be adjourned. That is what I will propose to the chairman."

Mr Bairstow , one of the company's biggest shareholders, said: "It would be unfair to make any comment on the plans without reading the detail."

Questioned about the moves to adjourn the meeting, Mr Coppel said: ``I wouldn't comment, other than to say that I think that it is a nuisance comment. Shareholders should not be deterred from the merits of these proposals.''

Mr Metcalfe added: "The negotiations required to reach the present proposals were inevitably protracted due to the appalling financial position of the group and the complexity of its debt structure.

``In the light of these circumstances the final outcome represents an important achievement for shareholders."

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