A crucial aspect was the possibility of the loss of the capital allowances to the ‘tax’ investors. Relations with lenders strained. The shareholders were unable to agree what actions to take. BMOL Partners engaged to advise and assist.
BMOL Partners reviewed the operations of the hotel in a short timeframe and delivered a report to all shareholders together with projections and sensitivity analysis. The report recommended the appointment of a hotel operator in place of current management and to enter discussions with the lenders to split the debt into parked debt and full serviceable repayable debt. Lender was amenable to the actions suggested and the reduction in the repayments allowed the hotel to trade on a cash positive basis.
The investors in the capital allowance scheme retained their tax write off and the hotel continues to trade.
Portfolio was funded by two banks who could not agree a strategy whereby the loans could be restructured to allow servicing from the reduced rent roll. BMOL produced a plan based on a combination of reduced margins / interest costs, amended loan terms and indefinite deferral of interest which all parties signed up to and which secured the portfolio intact for a further three year period.
The bank sought to apply significant interest penalties and unfavourable revised terms to maintain the loan for one further year. BMOL were appointed as financial advisors to a sub committee of the larger investor group and over a period of time actively represented the full investor group’s interests in successfully renegotiating a five year renewal of finance on significantly better terms than were originally proposed by the bank.
Bank wished to continue to use strong business cash flows to support / subsidise interest payments on development debts. We successfully sourced a refinancing deal with another institution on the profitable trading business, agreed an asset disposal schedule on the residential and development assets and put in place a mutually agreeable arrangement on any residual debt remaining after refinance and disposals.
BMOL successfully re opened negotiations with the bank and succeeded in agreeing an approach whereby BMOL would take control of the portfolio on a mutually agreed basis between the bank and the borrower and over an agreed time period proceed to implement a debt restructure (putting some assets onto a 15 year fully amortising basis), asset disposal and debt reduction strategy that met the requirements of both parties.
As a result client regularly incurred significant interest surcharges between expiry and renewal of the facilities. BMOL carried out an in depth investigation on the application of the surcharges and succeeded in achieving the immediate repayment of in excess of 60% of surcharges applied over the previous two years with a further undertaking from the bank to refund the balance should performance targets be achieved over the following twelve months.