Client Profile
A large European hotel and hospitality group operating a diversified portfolio of full-service hotels, luxury resorts, conference facilities and hospitality assets across France and Southern Europe. A period of aggressive expansion funded through acquisitions and property-level borrowing resulted in significant financial pressure when economic factors shifted and threatened its €1.2 billion enterprise value. A combination of higher interest rates, elevated labour, reduced corporate travel, changes in consumer travel patterns and weaker performance at several recently acquired properties materially reduced cash flow. The Company had approximately €890 million of secured and unsecured financial debt, together with significant lease obligations, supplier liabilities and other contractual commitments. Approximately €275 million of debt was scheduled to mature or require refinancing within the following 24 months. Although several properties were underperforming, the underlying portfolio remained highly valuable and the Company continued to generate substantial operating revenue. Management and its financial stakeholders therefore concluded that a comprehensive restructuring could preserve considerably more value than a disorderly enforcement or liquidation process.
Key Challenges
- Approximately €890 million of financial debt
- Approximately €275 million of near-term maturities
- Significant interest-rate exposure
- Declining profitability at selected properties
- High labour, energy and food costs
- Underperforming recently acquired properties
- Significant lease and contractual obligations
- Reduced debt-service coverage
- Limited refinancing capacity in prevailing credit markets
- Multiple secured lenders and creditor constituencies
- Risk of cross-defaults and individual enforcement actions
- Potential impairment of valuable hotel assets through forced sales
Our Mandate
The Company pursued France's “procédure de sauvegarde” as a means of obtaining a structured framework for implementing a comprehensive restructuring while maintaining control of its operating business.
- Development of restructuring alternatives
- Integrated Restructuring Plan
- Stakeholder & Creditor Negotiations
- Debt Restructuring
- Property Portfolio Rationalization
- Financing and equity capitalization
- Operational Transformation
- Coordination with French legal, accounting, valuation and other professional advisors
- Post-restructuring implementation and performance monitoring
Results
- €214 million reduction in financial debt
- €120 million of new equity and shareholder capital
- Significant extension of debt maturities
- Restructuring of secured and subordinated financial obligations
- Successful implementation of a court-supervised restructuring plan
- Company's core hotel portfolio preserved
- Monetization of non-core properties at negotiated values
- Improved occupancy, pricing and revenue management
- Significant reduction in operating expenses
- Improved EBITDA margins and free cash flow
- Preservation of approximately 4,700 jobs
Client Outcomes
The combination of court-supervised restructuring, creditor negotiations, significant debt reduction, new equity capital, portfolio rationalization and operational transformation provided the Company with a sustainable capital structure and the financial flexibility required to continue investing in its core properties and return to long-term growth.
RCP engagements are tailored to the facts, stakeholders and objectives of each situation.
Begin a confidential conversation