U.S. investment firm KKR has made a preliminary offer to buy bonds that can be converted into shares of the debt-laden hotel chain, according to a report on Friday from Reuters.
NH Hoteles, ranked 23rd in HOTELS 2012 ranking of the world’s biggest hotel companies, had nearly €1 billion of debt and €193 million of operating cash flow in 2011 and has been trying to sell its assets to cut debt.
Spanish savings banks, or cajas, own about one-third of the firm along with NH, have been under pressure to sell their equity stakes to meet new capital requirements ahead of a European rescue fund for the banking sector.
Spanish media said KKR could invest in NH Hoteles by first acquiring a 15.7% stake held by the parent of nationalized lender Bankia, worth about €100 million (US$130 million), or through a capital increase, or both.
NH Hoteles said in a statement to Spain’s stock market regulator on Friday that no definitive agreement with KKR had been reached, leaving it unclear what shape any stake buy or recapitalization plan might take.
“KKR would remove the cajas from the shareholder structure and governing bodies, provide financial support for NH, and manage the company from a value-creation perspective,” Spanish brokerage N+1 Equities told Reuters.
NH Hoteles’ business has been hit by recession in two of its main markets, Spain and Italy, but a deal could give KKR access to its more profitable hotels in Germany, Benelux, central Europe and Latin America.