Investors offer `contribution' towards hotel costs

The investors set to buy the Four Seasons along with the hotel group itself have offered to make a "substantial contribution" towards the cost of finishing the hotel building in Ballsbridge, Dublin.

Neither group has any legal obligation to make the payment and the contribution from the hotel group will be in addition to £3 million (€3.8 million) which it had already committed itself to paying should construction of the hotel run over budget.

The two companies developing the property, Simmonscourt Holdings Ltd and Harvard Properties Ltd, were placed in receivership last week by three of the consortium of four banks which are funding the project. The accounts of Simmonscourt, filed recently in the Companies Office, state that the project has "significantly exceeded" its budget target of £51 million.

Investors represented by two entities, the Nollaig Partnership and Stoneyview Ltd, have contracts to buy the hotel upon completion for £60 million. The receiver, Mr Pearse Farrell, of Farrell Grant Sparks, is seeking to establish exactly how much will be needed to complete the hotel. Some sources have said the final bill could be in excess of £70 million.

The banks are understood to have issued £53 million to date. As the budget has been exceeded and the building is not yet complete, the Four Seasons group's guarantee for £3 million provides additional funds. The amount now being offered by the investors and the hotel group is not known but will assist Mr Farrell in narrowing the difference between what is needed to finish the building, and what is available. Each of the four banks involved are being asked to take some of the losses accruing from the deal. Suppliers and companies contracted to conduct work on the building may also be asked to take a cut.

A spokesman for the investors said last week they had no legal obligation to make any contribution to the completion of the hotel and would not be doing so. However they have since changed their view.

Speaking on behalf of the investors and the hotel group the spokesman said: "Our negotiations with the receiver are confidential but we have always said we will do what is reasonable to ensure that the hotel opens and that we protect our employees and our customers."

Mr Farrell has said his "sole focus" will be the completion of the five star hotel by the end of the year. The hotel was originally due to open in February.

The four banks which have provided all the funds used in the development to date are: ACCBank, which is the lead bank; Anglo Irish Bank; Scotia Bank; and Bank of Scotland Ireland. The latter was not in favour of the appointment of Mr Farrell and has instigated legal action against ACCBank.

It has emerged that Harvard Properties Ltd, the lead development company in the deal, had an arrangement with the banks whereby the banks had first call on all the money received for the hotel, except for £3 million.

This £3 million is understood to be part of the money due to the company arising out of a prior arrangement it had to develop apartments on the top floor of the hotel building, an arrangement which it subsequently sold.

The directors of Harvard are financial adviser Mr Barry Kenny and former ACCBank chairman Mr Dan McGing.

Prior to the budget overrun, the Four Seasons group was not expecting it would make any financial contribution towards the building of the hotel. Construction of the hotel was the responsibility of the two development companies, and neither the investors nor the Four Seasons group were involved. Likewise the agreement between Harvard and the banks in relation to the £3 million is understood to have had nothing to do with the investors, who were unaware of any such agreement until it was revealed in the media last week.