Alwaleed-linked Savoy faces uncertainty on loans

Owners admit that operating results need to improve to avoid risk of breaching terms of bank loans
Alwaleed-linked Savoy faces uncertainty on loans
By Andy Sambidge
Fri 11 Oct 2013 10:29 AM

The owner of the Savoy, the five-star London hotel part owned by Saudi billionaire Prince Alwaleed Bin Talal, has admitted that it would be at risk of breaching terms of bank loans if operating results don’t improve.

Breezeroad Ltd has reportedly filed its concerns to Companies House, saying: “This risk represents a material uncertainty which could cast significant doubt as to the group’s ability to continue as a going concern.”

Bloomberg reported that Breezeroad’s directors prepared projections that assume an improvement in business and indicate the Savoy will continue to meet its debts, according to the filing.

If the financial projections aren’t met, loans to the company, controlled by Saudi billionaire Prince Alwaleed Bin Talal and a Lloyds Banking Group unit, could become repayable on demand, Bloomberg said.

Costs could be cut at the hotel, once frequented by Winston Churchill, Marilyn Monroe and Claude Monet, to avoid breaching loan terms, the directors said in the citing, according to the Bloomberg report.

The hotel had a pretax loss of £53.5m ($85m) in 2012, an 8 percent increase from a year earlier and revenue rose about 3.5 percent to £58.5m last year.

Kingdom Holding, the investment firm controlled by Alwaleed, in May completed its refinancing of the Savoy.

Kingdom said that French lender Credit Agricole and Germany’s DekaBank have jointly provided a £200m senior facility, with the property’s co-owner Prestonfield continuing to provide mezzanine financing.

The central London property, which first opened in 1889 is 50-50 owned by Riyadh-based Kingdom Holding and Prestonfield, an entity controlled by the UK’s Lloyds Banking Group.

The Savoy was acquired by Kingdom and Prestonfield in 2005 and underwent £230m of renovation works between 2008 and 2010, during which time the 268-room hotel was closed.

Kingdom Holding, which is 95 percent owned by billionaire Prince Alwaleed, has a number of other hotel investments in its portfolio, including 48 percent of Canadian chain Four Seasons.

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