Hiperion Capital Management, a fund management company, last week announced its interest in investing in the Grupo Playa Sol hotel chain, although any decision as to the viability of the proposition will be left to the judge. Fernando Ferré was imprisoned by the courts a year ago for his mismanagement of the Group, and accused of embezzlement, fraud, employing illegal immigrants and failure to pay insurance contributions and company taxes, and since then the company, which owns or rents 52 hotels and apartment complexes on the island, has remained under the jurisdiction of the courts. Hiperion have expressed its willingness to re-float the business within two years, to make all the necessary improvements, to continue with the employment of 1,000+ staff, to open some of the establishments on an all-year-round basis and to expand the chain by 20 per cent.
Meetings have been held between Hiperion and the present administrators, the state lawyer, representatives of the Balearic Government and the two unions, CCOO and UGT. Javier Perelló, one of the two administrators who used to be Ferré’s right-hand man, assured the press last week that, in theory, the move would be beneficial to all sides, but is awaiting the decision of the magistrate, which should be known today, the 20th April. Victor de la Fuente, the financial advisor to Hiperion, commented that careful studies have been in motion since the end of last year as to the future prospects of the hotel chain. Union representatives have welcomed this intervention, as not only would the present staff keep their positions, but the 20 per cent increase envisaged by the Fund Management group would create more jobs and they believe that, as the company is reliable, the rescue operation should therefore be successful. However, Ferré quickly poured cold water on the idea, explaining that Hiperion was not actually investing in the company, and that the €20 million which was currently on the table was being put up by the financial institution, Banco Popular. He continued that the company would simply run the hotel group, for which they would charge €1.7 million per year, a figure Ferré described as “astronomical”, especially for a company in crisis, as he described GPS. He finished by claiming that what the hotel group needed was liquid investors and not further bank loans.
The Hotel Federation also cast doubt on the potential takeover claiming the judge first needed to look at the solvency, seriousness and immediate plans of Hiperion Capital Management.
However, the investment company received support from island president, Xico Tarres, who claimed the takeover bid would be positive for the island. He continued that GPS was one of the largest businesses on the island, and extremely important to the tourist sector. It had been running illegally for many years, he continued, but this was a chance to reorganise the company and improve the quality of establishments on offer across the island.