Queens Moat may write off 300m pounds : Losses could put paid to dividend hopes

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The Independent Online
UP TO pounds 300m may have to be wiped off the value of Queens Moat Houses' 200-strong chain of hotels in Europe.

The provisional figure is a highlight of the confidential document, codenamed Goldie, handed out to more than 100 representatives from 60 banks at a meeting in London on Wednesday.

Weatherall, Green & Smith, chartered surveyors to Queens, have been retained to finalise a valuation. A spokesman for Weatherall said yesterday: 'We have not as yet reported formally with a report for 1992. And it would be inappropriate to say what our initial advice has been.'

But according to banking sources, at least pounds 200m - and as much as pounds 300m - will be written off hotel values. But despite that, they say the group would have gross assets of pounds 1.75bn.

Net assets, the Goldie document says, are around pounds 880m, equal to nearly 80p a share compared with the 47.5p price that dealings were suspended at last week. The document also says Queens has pounds 30m cash.

The revaluation of hotels could result in a big write-off, which would come on top of losses made in 1992. Results for last year have not yet been disclosed, but the loss was possibly as high as pounds 80m before tax largely because of accounting changes.

Queens, the bankers were told on Wednesday, almost certainly traded profitably in 1992 before the accounting adjustments and interest charges.

The losses together with any big write-off would almost certainly make it impossible for Queens to pay dividends on ordinary shares. Distributable reserves at the end of 1991 were pounds 151m, and that year's ordinary dividend payments cost pounds 26m.

Another meeting of the banks is planned for next week. Lenders have been asked to agree to a two-month standstill on more than pounds 1bn of debts. Weekly payments exceed pounds 1m.

Barclays and National Westminster, main bankers to Queens, are co- ordinating events in the UK. A central issue is the debt problem created by the failure of hotel managers to meet profit targets.

The scheme, under which managers have to make up any profits shortfall, is believed to have backfired amid extremely competitive pricing by UK hotels.

A statement issued on Wednesday night by Barclays and National Westminster caused confusion among leisure analysts.

'How can they say that 'there is no short-term funding requirement' when the company has had a rights issue in virtually every one of the last 10 years?' asked one analyst.

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