THE private equity owners of Stella Group have moved decisively to restore the company’s bruised financial reputation by creating two separately managed, financed and independently operated businesses – Stella Hospitality Group (140 hotels under the Peppers, Mantra and Breakfree brands) and Stella Travel Services (Harvey World Travel retail network among many brands). Owner CVC Asia Pacific said “each of the businesses will operate as a separate entity with its own Profit and Loss, capital structure, customer base, Board of Directors and management team.” Perceptions of Stella’s financial viability were placed under pressure by a series of reports in The Australian during April suggesting it was struggling to service $900m in debt. Under the new deal, Stella Hospitality has assumed $245m of long-term debt, Stella Travel Services will carry $40m in debt. Chairman Andrew Cummins said the restructure gives Stella Hospitality and Stella Travel “a solid and stable platform to grow as the hospitality and travel markets recover.” Update 4/8: Speculation that UBS has taken a major stake and that the restructure prepares the company/ies for a float. See SMH story also The Australian.
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