The Belfry House Hotel (United Kingdom) - Oct 2007

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01 October 2007

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A newco jointly owned by Zeus Private Equity and Hermes Private Equity has acquired The Belfry House Hotel, Manchester, for an undisclosed sum. The deal represents the first stage of a buy-andbuild strategy that will see a total of £50m invested to buy several underperforming regional threestar hotels for conversion into four-star hotels. The investors have taken an 80% stake in the business with management holding the balance of the equity. Allied Irish Bank provided a debt package which consisted of mainly senior debt with some working capex facilities. The refurbishment is due to begin in early 2008, with the acquisition of several further hotels expected to follow by the end of this year. Zeus was introduced to the team that will manage the newco on an exclusive basis by one of the private investors in its fund. The deal marks the first investment for Zeus from its maiden fund, which has a target figure of £100m and is designed to invest in regional businesses with an enterprise value of up to £50m. Having held a second close in June at £65m Zeus expects to hold a final close in December.

Company

The Belfry House Hotel is an 81 bedroom hotel located in Handforth, a short drive from Manchester airport. Originally built in 1901, it has since been extended and refurbished and contains extensive leisure facilities. The hotel also benefits from being close to many local sites of interest.

People

Gary Tipper and Ed Fazakerley led the transaction for Zeus and both will join the board of the newco. Steve Sherratt represented Allied Irish Bank.

Advisers

Debt - Pannone & Partners, Rob Fawke, Phil Treanor (Legal)Equity - BDO Stoy Hayward, Matt Copley, Stephen Green (Financial Due Diligence)Equity - Halliwells, Lucy Valerio, Mark Dawson, Rebecca Grisewood (Legal)Management - DLA, Wendy Harrison (Legal)

Sourced from: unquote unquote" 356 (Nov 2007)