Lehman, Starwood in Le Meridien deal

Investment bank Lehman Brothers and Starwood Hotels & Resorts have taken over Le Meridien hotel chain and acquired $1.3 billion of the British group’s debt at a discount.

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By  Shilpa Mathai Published  January 7, 2004

Investment bank Lehman Brothers and Starwood Hotels & Resorts have taken over Le Meridien hotel chain and acquired $1.3 billion of the British group’s debt at a discount. Lehman will take over $1.1 billion of the hotel and resort company’s outstanding debt, with Starwood funding another $200 million. According to a Starwood statement, Lehman and Starwood have also agreed to negotiate the recapitalization of Le Meridien in the coming months. Starwood now has an exclusive agreement with Lehman that gives it the first option to own or manage all or some of Le Meridien’s properties in the future. Both companies did not comment on actual ownership of Le Meridien or whether a final decision would have to wait until recapitalization. The companies have also not revealed the discount at which they bought the debt. Privately owned Le Meridien had been trying to restructure after breaching agreements with creditors. The company owes about 750 million pounds to Merrill Lynch, Canada’s CIBC and12 other banks. In July 2003 Le Meridien claimed to have struck a deal to hand over control of its international operations to Lehman, but that deal fell through in November last year. Meanwhile, Hilton International officially has taken over the management of the London Waldorf hotel today. The hotel will now be called The Waldorf Hilton. The 303-guest room, five-star Waldorf will shortly complete a £25 million refurbishment to all bedrooms and public areas. Wolfgang M. Neumann, Hilton UK & Ireland area president, said: “Hilton is delighted to have now taken over the operation of this flagship property in central London. The Waldorf Hilton will make a major contribution to our growing portfolio in London.”

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