Mint Hotel, the chain formerly known as City Inn, has become the latest HBoS-backed entity that new owner Lloyds is rumoured to be looking to sell.
The seven-strong company is trying to secure a figure in excess of £550m from buyers drawn to its combination of owned assets and potential for expansion.
The company was co-founded in 1995 by Sandy Orr, executive chairman, Donald MacDonald, vice chairman, and David Orr, CEO, with Bill Crerar and was set up as a joint venture with Uberior Ventures, the HBoS investment vehicle which is now part of Lloyds.
David Orr has objected to the use of the word "sale" in the press, preferring to describe the process as looking at options to push the group's growth in Europe, while confirming the appointment of JP Morgan Cazenove as adviser.
The story came as the group opened its new hotel near the Tower of London and prepared to open its first hotel overseas – in Amsterdam in April. It is these hotels which are thought to have precipitated the move to sell, driven by the debt the group has gained during their building.
The group has only recently rebranded as Mint Hotel, with the company feeling that the name City Inn was too reminiscent of the budget sector, rather than its offering, which includes strong f&b at a level closer to four star.
The company said: "It was clear that the name did not do justice to the overall experience of the brand, which has built its reputation on offering outstanding quality, innovation, exemplary customer service and exceptional value for money".
The group has also seen recent staffing changes, with MD Huw O'Connor leaving the role after 10 years at the company. He initially served as FD and for the last seven years as MD. The group has now lost the MD role, with Bill Starn coming in as FD.
Mint bucks the trend for asset-light operation which is so widespread in the sector, with all properties freehold or long-leasehold. Not only that, but they are new-build and often in costly locations. Put together, this created short-term pain, but the potential for long-term gain as it holds the assets going forward.
However, when this policy was combined with a desire for growth, exacerbated by the need to strengthen the new brand name with a larger estate, the need to find what David Orr has been quoted as calling "a new partner", became pressing.
Competition is expected to be tough for prospective buyers, with the group having a sound reputation within the sector, both operationally and for its popularity with customers – doing the basics right has been a theme, with award-winning bars and innovations such as iMacs in guest rooms on top.
In a statement, the company, which is reported to have debts of around £500m, with the new London site thought to have cost around £150m and the Amsterdam hotel around £135m, said it had "appointed advisers regarding its strategic options to continue the roll out of its successful chain of new build, custom made hotels across Europe".
Orr added: "With the expected completion of our Amsterdam hotel we believe it is the right time to take advantage of the significant opportunities we have to roll out the Mint brand across Europe." The group's expansion focus remains on developing hotels in prime UK and international city centres such as Paris and Rome.
Mint is thought to have made operating profits of around £13m in 2009 on turnover of £46m, with the group's City Cafes contributing around a quarter of turnover.
No names have yet been linked to a bid for the group. Mint may not be one for those looking to develop and sell on at a profit, now that it seems to have stabilised as a business. However, the good news for journalists is that, because of this, we can look forward to some time off, having already written the headline "Mint sells for a Mint".
HA Perspective: When the financial crisis took hold, the first moves among stricken banks such as HBoS were to shut down obvious basket cases. In the hotel sector, for HBoS, the biggest hotel lender in the UK, this was Guest Invest and aAim.
The next moves have been to work out the scale and nature of the problems with its other investments. Some, such as the Alternative Hotel Group, would have led to too big a write-off were they to be brought to market. Refinancing was the preferred solution.
For others, such as Mint, there is an opportunity to realise a little cash to shore-up HBoS's battered balance sheet and reduce its exposure to property. The fact it is coming to market first is testament to its perceived strength rather than weakness.