The standoff between Irish developer Paddy McKillen and the Qatari owners of the hotel group that owns Claridge’s and other high-end hotels could be box office.
According to the Financial Times, billions of pounds could be at stake in a fight between McKillen, who owned about a third of a hotel group that also includes the Berkeley and Connaught between 2004 and 2015, and a group of Qatari investors that acquired the properties in 2015.
McKillen claims he is owed billions of pounds under an agreement to share future profits struck with the Qataris at the time of the 2015 sale, which valued Claridge’s, the Connaught and the Berkeley at £1.3 billion.
McKillen is supposed to get 36 per cent of the upside valuation of the hotels minus capital expenditure. That payout could be significant given the work his management company has carried out to improve facilities.
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But what are the hotels worth in a post-Covid world? Some estimates, according to the FT, have put a current value of more than £5 billion on the hotels.
It seems the two parties cannot even agree which hotels are included in the deal, with Maybourne arguing that it does not include newer luxury hotels in the US and France.
Post the 2008 crash, McKillen fought a costly legal battle over the ownership of the hotel chain, a dispute that also involved Nama, Irish financier Derek Quinlan and Sir David and Sir Frederick Barclay, who were lined up by Quinlan to provide a financial rescue.
McKillen turned to Qatar as the “white knight” to resolve the ownership impasse. Qatar wanted to own 100 per cent of the hotels, so struck an deal that is only now being tested. McKillen emerged debt-free but with a lucrative seven-year management agreement, due to end this December. The two sides parted company in April and McKillen is now seeking his due, according to the FT.
Maybourne is ultimately owned by Qatar’s former prime minister Sheikh Hamad bin Jassim bin Jaber al-Thani, and its former emir, Sheikh Hamad bin Khalifa al-Thani, No doubt they are used to winning any disputes.
This could yet be settled behind closed doors, of course, but past experience shows that McKillen is unlikely to baulk at washing any dirty Claridge’s linen in court.
