Focus on private equity – KKR tables offer for Spain’s NH Hoteles

Spain’s NH Hoteles, Europe’s third largest business hotel operator, has received a preliminary offer from US private equity firm KKR to buy bonds to be converted into shares.

NH Hoteles, Europe’s third largest business hotel operator by rooms count, has long been tipped as a private equity target given its large debt and that of its savings bank shareholders, which together own nearly a third of the firm.

According to Spanish media, KKR could invest in NH Hoteles by first acquiring a 15.7% stake held by the parent of nationalised lender Bankia, worth about €100m or through a capital.

NH Hoteles has nearly €1bn of debt and €193m of operating cash flow in 2011, and has been trying to sell its assets to cut debt by a quarter in the next three years.

Given the current outlook of the domestic banking sector, Spanish savings banks have been viewed as unstable shareholders, and NH Hoteles is now understood to be in the process of analysing the proposal tabled by KKR.

While NH Hoteles’ business was severely hit by recession in Spain and Italy, two of its main markets, it is looking to access new European markets such as Germany, Central Europe and Latin America, which could bring profits to KKR.

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