Indian Firm Cox & Kings Weighs Sale of European Hotel Chain to Cut Debt

Location: Europe

Name: Meininger

No. of Keys: Around 12,000 in 3,500 rooms

The Properties: Shares of Cox & Kings, which defaulted on some of its borrowings earlier this year, have fallen 98% over the last 12 months to give it a market value of about $11 million

Cox & Kings Ltd., the Indian travel company, is exploring a potential sale of European hospitality chain Meininger Hotels as it seeks to cut debt.

The company is working with Lazard Ltd. to gauge interest from potential suitors for Berlin-based Meininger.

Meininger operates 28 budget hotels in Germany and other parts of Europe, including recent openings in Brussels and Heidelberg, and has a pipeline of about 15 more locations. The business recorded about €111 million euros (US$122 million) of revenue for the year through March 2019.

Shares of Cox & Kings, which defaulted on some of its borrowings earlier this year, have fallen 98% over the last 12 months to give it a market value of about US$11 million. It had about US$424 million of debt at the end of March, data compiled by Bloomberg show.

Cox & Kings said in July its working capital situation has been stretched by difficulties replacing short-term loans with longer-term borrowings. The company is taking “all required measures” to resolve the cash flow mismatch and is “evaluating each business” to improve operational performance, it said in an exchange filing at the time.

No final decisions have been made, and there’s no certainty the deliberations will lead to a transaction. Cox & Kings could decide to keep the business. Representatives for Cox & Kings, Lazard and Meininger declined to comment.

Investors have been drawn to the European hospitality industry this year, with Goldman Sachs Group Inc.’s merchant banking arm entering exclusive talks in May to acquire European chain B&B Hotels. In March, Singapore sovereign wealth fund GIC Pte agreed to invest in Dutch budget hotel operator citizenM in a deal valuing the company at about 2 billion euros.

Main Photo: The distinctive look of Meininger hotels (St Petersburg)

Brand/Management: Up to the new buyer, if there is one!

Current Owner: As above…Cox & Kings

Yield: In 2019, Meininger made a full-year profit (ebitda) of US$25.2 million (1.7 billion rupees), up 34 percent on 2018, while the international leisure business saw its profit increase 26 percent to US$27.9 million (2.45 billion rupees).

Agent: None appointed but THPT is close to Meininger senior management.

Date Posted: September 2019

THPT Comment: Meininger, in it’s own right, has been a “darling” of the hotel/hostel hybrid world, and with the big fan-fare of the sale of it’s rival, Generator, we suspect there could be much interest in this fast-moving brand. We just hope it doesn’t go the way of Superbreak and LateRooms, owned by Malvern Group, which in turn was 49% owned by Cox & Kings, who had to go into receivership just recently (August 2019).

First Seen: Business Standard News (India)

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