Puma Hotels stays positive despite bank debt of more than £330m
The directors of Puma Hotels are confident that the group, which owns 21 four-star regional properties, will be able to stay in business as it attempts to pay back bank debt of more than £330m.
In the company's recently reported financial results, Puma posted losses of £175m.
The past year has been one of great upheaval for Puma, with Spanish hotel operator, the Barceló Group, pulling out of an agreement early to operate the 21 hotels, which include the 152-bedroom Imperial hotel in Torquay and the 776-bedroom Lygon Arms in Broadway, Gloucestershire.
Since the end of April, Puma has resumed the direct management of the hotels, which it previously operated prior to the signing of a 45-year lease with Barceló in 2007. The Spanish group agreed to pay a penalty fee of £20.25m for breaking its contract.
Puma has also negotiated with its bankers, Irish Bank Resolution Corporation (IBRC), an option to extend its current debt facility until 31 December 2013.
Turnover for the 12 months to 31 December 2011 of £31.4m includes the £30.3m rent from Barceló. A downward valuation of the 21 hotels has also added to Puma's woes.
However, Puma showed a net profit of £5.5m, although it was down from £6.3m in 2010.
Director Peter Procopis said in the report that although the termination of the Barcelo arrangement had resulted in a lower level of net income, Puma's operations were forecast to "remain profitable and cash-flow positive" before deducting interest to be paid on its debt facility, which involves a number of conditions.
Independent auditor Sarah Sanders of Deloitte, warned: "The existence of these conditions indicates a material uncertainty that may cast significant doubt about the company's and group's ability to continue as going concerns."
Barcelo Hotels property owner continues to make progress >>
Barceló pays £20.25m to pull out of UK >>
Puma Hotels' Collection launches with 20 Barceló properties >>
By Janet Harmer
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