CC and DLA Piper check in for £650m hotel group debt swap

Clifford Chance and DLA Piper have landed leading roles in a deal that has been hailed as one of the biggest debt-for-equity swaps in UK corporate ­history.

Mark Carroll
Mark Carroll

A multidisciplinary ­Clifford Chance team acted for lead arranger Bank of Scotland on the transaction that will see the restructuring of £650m of debt in De Vere hotels.

The team was led by ­corporate finance partner Mark Carroll and banking partner Malcolm Sweeting. Pensions partner Hywel Robinson and tax partner Dan Neidle also acted for the bank.

DLA Piper advised ­Alternative Hotel Group (AHG), the owner of De Vere, whose assets include Brighton’s The Grand and Cameron House on Loch Lomond. Corporate partner Jonathan Richards led the DLA team, which also featured finance partner Philip Butler, pensions partner Matthew Swynnerton and tax partner Karen Friebe.

The DLA relationship with AHG dates back to its original £1.1bn acquisition of De Vere in 2006.

The latest deal will see a syndicate of banks led by Bank of Scotland swap a portion of its outstanding debt for a preferential ­equity investment in the hotels group. It will see AHG’s total debt reduced to just over £1bn, with the term for the remaining chunk of debt extended by two years so it now matures in 2013.

DLA’s Richards confirmed that the swap marked “the substantive restructuring work” for the distressed group, which is now understood to be in a position to recover the remainder of its debt.
Lloyds Banking Group, which took control of Bank of Scotland in 2009, has left the equity ownership of AHG intact without ­injecting further cash.

Carroll, who handled the restructuring of the debt and the distribution of the preference shares, said the six-month deal was unusual in terms of both its size and complexity.

“It was technically very, very complicated,” he ­commented. “It was also all played under the increased scrutiny that banks are now subjected to. From the client’s point of view, they’re very pleased to get this done. It required a great deal of cooperation from all involved.”