24 March 2015 – Expansión
Debt / The entity presses for the auction of the company that controls the asset.
The Royal Bank of Scotland (RBS) is willing to pull out all the stops to recover its debt from Continental Property Investment (CPI), the fund managed by Boutros El Khoury. To this end, and faced with the insolvency of the Lebanese investor, the entity wants to take control of the Husa Princesa Hotel in Madrid.
The property forms part of a complex of offices, shops and hotels that CPI purchased from Metrovacesa in 2010 for €122 million. Subsequently, the fund made other acquisitions in Spain, including the hotels La Florida and Miramar in Barcelona, the Hotel Meliá in Valencia and an office building at number 240 Calle Serrano (Madrid).
In 2013, the subsidiary of CPI in Spain – CPI Developments Spain 2009 – was unsuccessful in its negotiations to refinance its debt. A year later, in the face of defaulted payments, RBS requested the resolution of the mortgage and the auction of the Husa Princesa Hotel. To save time and avoid the auction, the subsidiary of CPI in Spain filed for bankruptcy on 30 September 2014.
RBS is one of the creditors of the company. It granted financing to CPI for the purchase of the Husa Princesa and Moncloa Hotels – at the time there were two hotels on the site, which were then merged into one – and whose debt exceeded €60 million. Other creditors include Metrovacesa and Sacyr, with whom the company has litigation cases pending.
According to the bankruptcy report, prepared by Pedro B. Martín Molina, the company, which continues to be managed by El Khoury, has debt amounting to €116.89 million. However, overall, the value of the assets exceeds the value of the liabilities, and so the subsidiary of CPI in Spain has a capital surplus of €9.43 million.
RBS has launched proceedings to auction its shares in CPI Developments Spain 2009, whilst it waits for the bankruptcy proceedings to be resolved, at which point it will be able to execute the auction of the Husa Princesa Hotel. El Khoury, as the director of the aforementioned company, has received the corresponding notification and, over the next few days, the opening of the proceedings will be reflected in the Official Bulletin of the State (BOE). Besides recovering its debt, RBS wants to relieve El Khoury of his management role to prevent him from continuing to take actions that, in the bank’s opinion, are illegal. One such action involved the signing of an agreement with Marriott to relieve Husa from the management of the hotel – its contract expired at the end of August -. RBS sent the US hotel chain a letter, in which it warned that any agreement would not be valid without its consent; it has not received a reply. In parallel, El Khoury is undertaking major construction work at the hotel, which remains open, to increase the commercial area of the building.
RBS has notified both the Town Hall of Madrid and the bankruptcy administrators that construction work is being carried out on several floors of the hotel, even though no permit has been requested to cover the works being undertaken. The four star Husa Princesa Hotel has 423 rooms and for the moment, is still being managed by Husa, although that company has also filed for bankruptcy.
Original story: Expansión (by Yovanna Blanco)
Translation: Carmel Drake