The DM1.8m payment, which was made despite a request to more than 60 banks for a two-month standstill on interest payments, has defused a potentially damaging Anglo-German banking row over the interest payments. Queens Moat's total debts are said to exceed pounds 1bn, and weekly interest payments are put at more than pounds 1m.
The payment has prevented the loan going into default. It may also lead to the release of an estimated pounds 15m of deposits held by German banks.
It is understood that German banks have in effect frozen the deposits as a 'set-off' against loans.
Commerzbank has been asked by Barclays, one of the company's main bankers, to mediate with German banks that have lent money to Queens Moat.
A banking source said yesterday that the situation 'was being kept stable'. Queens Moat has more than 40 hotels in Germany.
A senior banker said recently: 'There are substantial credit balances tied up all over the group.' The balances include pounds 15m on deposit at Barclays.
There was a meeting yesterday of the banks' steering committee, formed last week, comprising Barclays, Credit Suisse, Fuji, National Westminster, Commerzbank and Sanwa. 'The mood at the meeting was fairly positive and optimistic,' a source said. One of the main tasks facing the committee is to establish exactly what lines of credit have been extended by dozens of banks to the company.
Discussions with banks are still taking place, and there is no indication whether all of them have agreed to the standstill proposals.
Small shareholders, meanwhile, are becoming angry about a lack of communication about the company's plight since the shares were suspended two weeks ago at 47.5p.
'We have only received one letter and that was on 3 April,' said Stan Richards, a retired electrical contractor in Penzance, Cornwall.
'I wonder what the role of the independent directors is. We should have somebody on the board looking after our interests,' he said.Reuse content