Mint Hotels to be sold in £575m deal

THE Mint Hotel chain, founded by Scottish businessmen Sandy Orr and Donald McDonald, is close to being sold in a deal worth £575 million.

Three bidders have emerged for the company formerly known as City Inn. US private equity business Blackstone is competing with property investor London & Regional, and a joint venture between Goldman Sachs' Whitehall Fund and private equity group TPG Capital of Texas.

About half of the business is owned by McDonald, Orr and his son David Orr, the company's chief executive. The other half is owned by Uberior Ventures, the property investment vehicle that Lloyds Banking Group inherited with its acquisition of HBOS in 2009.

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Any deal is expected to see the continued involvement of the existing management team, which has previously outlined ambitious plans for European expansion. One source described the process, which began late last year with a strategic review headed by JP Morgan, as being a matter of "getting the right shareholder structure in place".

Lloyds has been paring back on the damaging property exposure that has been a significant contributor towards billions in losses by the group since the HBOS acquisition. During the two years to 2009, Uberior alone wrote down the value of its holdings by more than 1 billion.

The bank is managing its joint ventures on a case-by-case basis, with some receiving continued support but many others being sold or restructured. In the latest accounts filed by Uberior - which showed a pre-tax loss of 576m in 2009 - directors said the company remained committed to holding and managing "new and existing investments".

"The company aims to hold each investment for the appropriate time period which will maximise returns to Lloyds Banking Group and therefore profits recognised on disposals can fluctuate year-on-year," the report added.

Under its former brand name, Mint opened its first hotel in Bristol in 1999, followed by Glasgow alongside the city's conference centre in 2000. It now has seven city centre sites, plus one overseas in Amsterdam.

Its two newest account for a large chunk of the chain's current debts, thought to total about 500m.

The two Orrs came up with the idea for Mint's predecessor while David was working as partner with Edinburgh letting agents John McGregor. Their strategy called for the construction of a limited number of new, well-designed city centre locations catering primarily to business travellers.

The company's relationship with HBOS dates back to 1998, when it became the first joint venture company established in partnership with Bank of Scotland. The deal was sealed with former Bank of Scotland Corporate head Peter Cummings.

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