RBS mulls equity swap at struggling Jurys chain

ROYAL Bank of Scotland is weighing up a debt‑for‑equity swap with cash‑strapped Irish hotelier Jurys Inn that City sources believe could see lenders write down as much as £250 million of borrowings.

RBS, 83 per cent owned by the taxpayer and expected to unveil up to £2bn of annual headline losses when it reports results for 2011 on Thursday, is lead lender to Jurys.

Together with other lenders to the chain, Allied Irish Banks (AIB) and the Irish Banking Resolution Corporation (IBRC), the Scottish bank is understood to be considering three plans to restructure Jurys’s £650m of debt.

This could involve the existing owners, the Oman Investment Fund, the investment arm of the Sultan of Oman, and Dublin‑based private equity firm Avestus Capital, injecting new money into the business; one or all of the three main bank lenders swapping debt for equity with or without an accompanying cash injection from management; or, much less likely, a sale.

RBS, which would not comment yesterday, currently has no equity in Jurys Inn, which has 32 three‑star hotels in Ireland, Britain and the Czech Republic.

One City source said: “If there is a debt‑for‑equity swap done with the banks I think we are talking about an announcement in the next few weeks rather than months.”

However, it is said that AIB and IBRC are currently slightly less keen on a debt-for‑equity swap than RBS, which itself, under chief executive Stephen Hester, has been more into jettisoning assets than acquiring them.

Avestus, formed by former Irish tax inspector Derek Quinlan, led the buy-out of Jurys in 2007 for €1.1 billion (£920m), later selling a 50 per cent stake to Oman Investment Fund.

It is thought the owners are considering injecting around £160m into the business.