Bloomberg News

Lloyds Sells Moran Loans to Canyon, Hotel Operator Says

January 04, 2013

Lloyds Banking Group Plc (LLOY) sold its loans in Ireland’s Moran Hotel Group to Canyon Capital Advisors LLC, according to the hotel operator.

The group is “at an advanced stage of a restructuring plan” it said in an e-mailed response to Bloomberg News from Dublin today. Lloyds agreed to sell as much as 140 million euros ($183 million) in loans at a discount of about 70 percent to a unit of the U.S. hedge fund, said two people with knowledge of the transaction who declined to be identified because the information is private.

Lloyds, the U.K.’s largest mortgage lender, is selling Irish loans after being caught up in the implosion of the country’s real estate bubble. The London-based bank has taken 11.8 billion pounds ($18.9 billion) of impairment charges on Irish loans since the property collapse in 2008, according to Bloomberg News calculations. That equates to about 40 percent of its peak Irish loan book.

Officials at Brunswick Group LLP, who represent Los Angeles-based Canyon Capital, didn’t return calls seeking comment. Ian Kitts, a Lloyds spokesman, declined to comment.

Moran Hotels owed 693 million euros to banks at the end of 2011, latest available filings by Dublin-based T&S Taverns Ltd., the group holding company, at Ireland’s companies office registry show.

Business Plan

The Canyon accord leaves Moran Hotels owing money to Bank of Ireland Plc, Allied Irish Banks Plc (ALBK), Royal Bank of Scotland Group Plc’s Ulster Bank and the hedge fund, the people said. The banking syndicate hired accounting firm Grant Thornton Ireland last year to review a five-year business plan for the indebted hotel group, the Sunday Times reported in May.

Much of the debt stems from the Tom Moran-led company’s acquisition of the Bewley’s Hotel Group in 2008 from Bert Allen, a director at Slaney Meat Packaging Co.

Profit per room at Irish hotels has dropped 44 percent since 2007 and the industry has debts of about 6.7 billion euros, Galway University economist Alan Ahearne said in October.

The sale of the Moran loans continues Lloyds’s retreat from Ireland. New York-based Blackstone Group LP (BX:US), the world’s biggest buyout firm, bought the 501-bedroom Burlington Hotel in Dublin for 67 million euros in November from Grant Thornton, which was acting for Lloyds. That’s less than a quarter of the 288 million euros an Irish real estate developer paid in 2007.

The same month, Lloyds said it would sell 1.5 billion pounds of Irish commercial real estate loans to New York-based Apollo Global Management LLC (APO:US) for 10 percent of the face value.

To contact the reporters on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net; Neil Callanan in London at ncallanan@bloomberg.net

To contact the editors responsible for this story: Edward Evans at eevans3@bloomberg.net; Andrew Blackman at ablackman@bloomberg.net


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