• Digging to continue at Aviemore

The Aviemore Highland Resort, which has been valued at £130m, has been sold-off via a "pre-pack" administration to existing manager Macdonald Hotels.

Funder HBoS has taken a hair cut but it has chosen to keep the business running in a move that may prove the pattern for other distressed businesses within its portfolio.

HBoS was previously part of the consortium that owned AHR along with Macdonald and Tulloch. Thanks to HBoS's 50% stake in Macdonald, it means the bank, now part of Lloyds TSB, is the effective owner of AHR.

The main issue for AHR was a tortuous planning process that held up its £80m extension. At present the resort has four hotels which can accommodate up to 1,000 guests. There are also 18 lodges, a conference centre and other leisure facilities on the 100 acre site.

The administrator, Bruce Cartwright from PricewaterhouseCoopers, blamed the "prolonged" planning process as a "contributory factor" towards the resort's financial difficulty. Macdonald is now expected to continue with the development plans.

Meanwhile, the administrators of the Real Hotel Group are continuing to unload assets. The latest are London's Connaught Rooms and the Glasgow Central Hotel.

The buyer is Principal Hayley, the Permira-backed hotel and conference business.

Principal is investing about £40m across both properties with the bulk, £33m, going on the dilapidated Glasgow property. The Scottish hotel has become something of a legend over the years for its parlous condition.

Martin Clarke, a partner at Permira and a board member of Principal Hayley, said: "We are extremely keen to develop even more opportunities for the Group across the UK and northern Europe."

Edward Symmons was the agent acting on behalf of administrator BDO Stoy Hayward. Christie & Co acted for the freeholder of the Glasgow property, Coopervale.


HA Perspective: The adage says that when you are in a hole you should stop digging. Nobody at HBoS or Permira seems inclined to agree.

For HBoS, or Lloyds Banking Group as we should now call it, a restructuring that saves jobs and a little face is clearly the preferred option given that the UK Government has a controlling stake.

But for both Lloyds and Permira, it may well make sense to play the long game and look for an exit when the recovery is in full swing.

If such an approach is widely adopted, it is hard to see there being a swathe of distressed sales.

At last week's World Budget & Economy Hotels Congress 2009, held at One Whitehall Place, London, one banker on a panel said that there was surprise even with his bank at the lack of distress out there.

"A lot of businesses are being saved because the deal was struck off of base rate lending that was not hedged," he added.

Vulture funds were bidding as low as 50% of the replacement cost and the strong divergence of opinions is why transactions were not happening, he also said.

It is certainly the case that until would-be buyers increase offers to levels where it makes more sense for the debt finance to exit than continue limping on, it is hard to see more deals.

But right now, there remains huge uncertainty in the market. As the banker said during the conference, even within banks there is a constant change of opinion. Only once this has settled down and the banks decide firmly to leap in a particular direction can the transaction market start in earnest again.

Given the ongoing wrangles in the UK between the Treasury, the Bank of England and the Financial Services Authority and the continued fears about banks in continental Europe, a flood of deal making looks a little way off yet.

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