Too kind

20 May 2003 By Hugo Dixon

But make no mistake, the private equity guru isn t motivated to rescue the sinking hotel group out of kindheartedness. All investors will take a share of the pain in recapitalising Meridien. And Hands could have a shot at scooping up control.

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Guy Hands is prepared to pump £100m or more into Le Meridien on the condition that the banks write down the value of their loans, according to a report in the Sunday Times. The financier, who formerly ran Nomura's private equity bueiness, led the £1.9bn buyout of the troubled luxury hotel company in 2001.

In April, the group breached covenants on its £1bn debt and stopped paying rent on hotel properties.

Le Meridien's capital structure consists of £380m of equity; £1.25bn provided through a sale and leaseback agreement; £750m of senior debt; and £230m of junior debt.

Guy Hands manages the Le Meridien investment via his private equity startup Terra Firma.

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