THE company behind Malmaison and Hotel du Vin is poised to appoint administrators within days as it struggles to refinance or find a buyer.
But the management of MWB Group has insisted that the problems affecting the parent company would have “no impact” on the trading of Malmaison and Hotel du Vin, and that both businesses were “continuing to trade in line with expectations”.
It is understood MWB will appoint its adviser Deloitte as administrator after talks to find a buyer for the 26 hotels or a new investor reached an impasse.
The group is facing a cash crunch after it emerged it was in a dispute with its 75 per cent owned subsidiary, temporary office space company MWB Business Exchange. Two weeks ago the division announced it would withhold monthly payments to the group on a £4.8 million loan, claiming it would offset the liability against an £8m loan the hotels group in turn owed to the business centre division.
The move resulted in the group suspending its shares on the London Stock Exchange at the start of the month and delaying the publication of its annual results, as it warned the spat could result in the shares becoming worthless.
On Tuesday the hotels group announced that its finance director, Keval Pankhania, and another director would leave the firm immediately. At the same time it announced that Andrew Blurton, who had been the group’s finance director for 13 years until 2010, would return to take a place on the board of MWB Business Exchange as corporate finance director. The moves come months after the company’s founder, Richard Balfour Lynn, resigned from the board but said he would maintain his 10 per cent shareholding.
In June, it was reported that MWB had appointed advisers to find a buyer for all or part of the hotels business. Despite having extended its £172m debt facility with lenders including Royal bank of Scotland to 2014, it was struggling to meet repayment terms.
This is despite MWB having embarked on a sale and lease back of five of its hotels last year, which slashed £100m from its debt.
The group recently agreed a 35-year lease to run the former Tay Hotel in Dundee, which is currently being refurbished by its owners to become a 91-room Malmaison Hotel, a key part of the city’s £1 billion waterfront regeneration plan which includes the development of the V&A museum.
When the company suspended its shares, chief executive Gary Davis, who was bought into run MWB’s hotels business in January, said the share suspension would not affect the hotel project in Dundee as “MWB are not investing in that project”.
In March, MWB’s chairman Eric Sanderson, who is also chairman of the court of the University of Dundee, said “even in the current climate, businesses must continue to develop their brand recognition and grow” despite recording a £23m pre-tax loss on continuing operations in the year to the end of 2011.
The company owns the business that runs Malmaisons in Leith, Aberdeen and Glasgow, and the Hotel du Vin in Edinburgh and in Glasgow at One Devonshire Gardens. The company plans to open a Hotel du Vin in St Andrews.
