04 Apr 2011
Successful restructuring of 16 Hilton Hotels
Lawrence Graham ("LG") has acted for the owners on the successful restructuring of their multi-syndicated senior, stretch senior and mezzanine debt aggregating in excess of £340m, secured on a portfolio of 16 Hilton-managed hotels, which includes the Hilton at Gatwick Airport and the London Olympia.
LG was involved in all aspects of the transaction, including the debt finance restructuring, new money loan and priority arrangements, the hotel/asset management arrangements, the debt for equity swap and investment terms, and advice to the board of directors on their fiduciary duties. Under the terms of the restructuring, new money of £6.7m was injected into the structure by way of secured loan from the shareholders, and part of the junior tranches were swapped into an equity interest in the borrower-group. The senior and stretch senior tranches were amended and restated.
Finance head Nick Turner led the team advising the owners, which included senior associate Jon Lent, and associates Ara Vadjaraganian and Danuta Yarygina on the finance and restructuring side; hotel group leader, partner Michael Lacey, acted on all aspects of the asset management arrangements and hotel management negotiations; partner Christine Jackson led on the property side, assisted by associate Bradley Silver; partner Richard Elphick led the equity team, which co-ordinated legal advice in Jersey.
Nick Turner comments: "We are delighted to have seen the owners through to a successful outcome. LG acted on the financing aspects of the £397m sale-and-management back of the portfolio from Hilton to the owners in November 2005, and since then we have acted on the property and asset/hotel management issues in respect of the portfolio. LG has therefore been perfectly placed to work with all stakeholders to steer the owners through to a successful restructuring. This represents another significant restructuring transaction for the LG team, and another in a series of high-value hotel restructurings on which we are advising."
Nick Turner of LG has been inundated with a significant increase in high value real estate restructuring work in the UK and Europe. Nick comments that "Banks and other stakeholders have been sitting on distressed asset positions for too long. We now expect a larger number of these positions to be closed out during the course of this year through consensual restructuring or enforcement".
Rothschild acted as restructuring advisers to the owners; Carey Olsen, Tods Murray and Hassans acted for the owners in respect of local law matters. Linklaters acted for the Senior Lenders, and A&O acted for the Junior Lenders.
About LG's Finance group:
Our banking and restructuring lawyers are renowned as experts in their field who represent clients in many of the largest restructuring cases. We advise lenders, creditors, shareholders, new money providers, and servicers/special servicers, on recovery strategies, businesses on turnaround solutions, and directors on their duties and responsibilities.
Our experience on debt restructurings ranges from covenant re-sets through to complex balance sheet/cashflow restructurings involving debt for equity swaps, upside profit arrangements, tax and new money structuring, rescue issues and rescue debt, and intercreditor arrangements governing the rights of the various stakeholders.