Hotel group faces an uphill struggle

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Queens Moat Houses, emerging from a long and painful restructuring, is unlikely to resume trading at a price much above the low teens when its shares are requoted early next year.

That compares to a price of 47.5p when the shares were suspended in March 1993.

Analysts believe this week's debt shuffle outlined by the hotels group will see the shares struggle to reach 15p.

"Given the 60 per cent dilution shareholders face, there can't be much change left over from 10p," said one analyst.

However, chief executive Andrew Coppel is confident that shareholders will vote in favour of the restructuring plans when they are finalised in January. "This deal will drive our recovery over the next three years. We believe it is a good deal all round," he said.

Mr Coppel said initial soundings taken among major shareholders showed they support the restructuring. Peter Hilliar, analyst at stockbroker Barclays de Zoete Wedd, said that an improving trading environment was working in QMH's favour, and that it is now a far better-run operation than it was under the old regime.

QMH, toiling under a £1.49bn debt mountain, has been through substantial changes since it first revealed the extent of its crisis. Mr Coppel believes the new deal is set to "drive the group's recovery over the next three years". But there is no sign of adividend for the foreseeable future.

If shareholders are less than delighted by the outcome, the Bank of England can salvage some credit from the debacle. QMH avoided administration, and ultimately liquidation, under the Bank's so-called London Rules. These were introduced to allow problem companies hit by crisis to continue trading while their banks protected them from creditors.