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Last Updated: Monday, 23 June, 2003, 21:25 GMT 22:25 UK
Hotel group 'on brink of collapse'
Grosvenor House Hotel
The Grosvenor House Hotel is run by Le Meridien
Hotel group Le Meridien is locked in last minute talks with its lenders in an attempt to stave off administration, according to sources.

The group, which runs some of Britain's best-known hotels including the Grosvenor House and the Waldorf in London, is attempting to restructure its mounting debt pile.

It has been told by lenders Merrill Lynch and CIBC World Markets it has until Friday to come up with a refinancing plan or be placed into administration.

Le Meridien has been hit by the global downturn in travel and tourism.

'Underlying performance'

The group was sold into private hands in May 2001 and is also partially funded by a sale and leaseback deal with the Royal Bank of Scotland (RBS).

Up until now, Le Meridien's creditors, including Merrill, CIBC and up to 12 other banks, have kept up the monthly rent payments to RBS.

But the banks are now demanding the hotel chain come up with fresh financing before it pays the next 20m rent cheque, which is due next Monday, sources quoted by Reuters news agency said.

Other options include getting RBS to put its demands on hold until Le Meridien can come up with a new business plan, or getting the banks to agree to a cash injection from venture capitalists Alchemy and Terra Firma.

A spokesperson for Le Meridien said the hotel group was "well advanced in constructive discussion with the relevant stakeholders, both in relation to the forthcoming rent payments and achieving a secure future" for the company going forward.

"Our underlying operational performance despite the difficult climate, is as good as, if not better than, many of our competitors," the company added.

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