Dalata checks in with €700m funding deal for acquisitions and to refinance debt

Dalata, the largest hotel group in the State, has agreed a deal to raise up to €700 million in debt funding from an consortium of six banks.

The deal provides cash for the refinancing of existing debts, acquisitions and the general operation of the group, which owns the Maldron and Clayton hotel brands and operates properties totalling 8,000 rooms in Ireland and the UK.

As part of the new arrangement, two new banks, the UK's HSBC and Banco de Sabadell from Spain, join four existing banks – Bank of Ireland, AIB, Barclays and Ulster Bank – as lenders to the group.

The finance package is split into three distinct chunks. The first tranche is a €200 million term loan, the second is a €325 million revolving credit facility, and the third comprises pre-approval to increase the facilities by a further €175 million, if and when required.

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The lending documents highlight the use of the new banking facilities to finance the recent £91 million (€103 million) acquisition of a hotel in London.

Dalata agreed a deal in August to buy the 212-room property, which is under construction at Aldgate in the city and due to open by the end of the year. It will operate under the Clayton brand.

Dalata will complete the purchase by buying the shares of a company, Hintergard, from a US investor using the freshly negotiated funds.

In order to provide security for the new finance package, Dalata will implement a corporate restructuring. Most of its properties and assets are currently controlled by a group subsidiary, DHGL. Under the latest arrangement, a new Dalata company, DHG Glover, will be set up to buy out DHGL.

The new company will finance the intercompany transaction with the finance from the six-bank consortium, and provide the security.

Dalata, which was founded by its chief executive and veteran hotelier Pat McCann, declined to comment on the details of its new finance package.

The listed company is in the midst of an expansion plan. It recently opened a new Maldron hotel on the corner of Kevin Street, close to St Patrick’s cathedral. It is understood that occupancy rates in the property breached the 90 per cent mark in both September and October.

Dalata is also developing a 180-bedroom Clayton hotel on a prime site close to the Grand Canal in Dublin’s south inner city. The Charlemont property is due to open later this month, next door to the Barge pub, which is located just over the canal from leafy Ranelagh.

More than half of Dalata’s stock is already concentrated in the greater Dublin area. But the group recently told investors that because of the city’s “strong market dynamics”, it is well placed to develop even more rooms in the city.

Dalata controls about a fifth of Dublin’s hotel stock. About a quarter of its capacity is in the UK, while the rest is spread around different regions of Ireland, where its revenues are growing at more than 8 per cent annually.