Pestana in €15M debt talks

The Portuguese hotel group Pestana is said to be negotiating with creditors to avoid paying a €15 million loan in 2021.

The largest hotel chain in the country has been hit hard by the Covid-19 pandemic and will call on certain private institutional shareholders who granted the loan and ask them to waiver one of the financing conditions for the loan contracted in 2015.
At issue is a portion of the debt which Pestana admits that it could not meet in 2020 and will be unlikely to meet in 2021. If not agreed Pestana would have to fork out the entire sum.
In July 2015, the Portuguese hotel Chain issued 150 golden shares at €100,000 each to a total of €15 million.
This loan was contracted at an annual interest rate of 3.95% and matures in 2022. Pestana is said to have already paid the shareholders €2.96 million in interest.
But if repayments of capital and interest ran swimmingly until the start of 2020, the Covid-19 pandemic upturned the apple cart.
Because of the impact that the pandemic had on the sector, the hotel chain says that it now is not in a position to meet all the commitments contracted under the terms of the loan.
The net ratio Debt/EBITDA needed to be less than seven times, therefore Pestana called the shareholders to an extraordinary general assembly meeting at which it will call on the shareholders to dispense with this criteria since the ratio is already above this.
In a statement to online news source ECO, Pestana CEO José Theotónio said he was confident that the shareholders would agree. “This loan is a private one with two or three institutions who hold these shares and understand the risk and in the case they do not accept, the Pestana Group will have to pay off the loan.”
“We have the conditions to pay it, but obviously this is not the ideal time to pay off loans upfront,” he added.