Queens Moat may seek debt for equity swap

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The Independent Online
Queens Moat Houses, the debt-laden hotel group, said yesterday it was considering plans for a financial restructuring after reporting a pre-tax profit of pounds 5.2m for the six months to June compared to a loss of pounds 3.1m in the first half of last year. QMH said it was likely to seek a debt for equity swap but refused to be drawn on any timetable for the deal.

Andrew Coppel, QMH's chief executive, said: "We are not under any pressure to undergo a financial restructuring."

Mr Coppel also vowed to defend vigorously a court action bought against the group by four former directors which is due to start on 3 October.

Lead by John Bairstow, the group's former chairman, they are claiming wrongful dismissal. They allege that QMH's new management, not themselves, was responsible for the huge pounds 1bn loss the group made in 1992.

Mr Coppel said the QMH was also considering suing Bird Luckin, the group's former accountants, and Weatherall Green & Smith, the property advisers who used to value its hotels, over their role in QMH's financial problems. Earlier this year the group issued a High Court writ to Bird Luckin. However Mr Coppel said yesterday: "We are reserving judgement on whether to take further action against Bird Luckin and Weatherall."

QMH plans to accelerate rapidly its capital expenditure programme to take advantage of the strong recovery in the UK hotel market. It will spend up to pounds 40m this year compared to just pounds 29m in 1996.

QMH's debts fell to pounds 819m compared to pounds 933m at the end of last year after it received pounds 91.5m from the sale of 25 UK hotels.

The group confirmed it will continue to sell hotels to fund its spending programme and pay off debts. It has recently sold two hotels in Germany and has identified a number of other hotels in its 35-strong chain over there which will be disposed off in the near future.

"We have identified a core portfolio of hotels which contribute 80 per cent of our German profits. We will take the opportunity to dispose of our non-core properties," said Mr Coppel.

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