German Banks Bail Interhotel Group Out of Debt
FRANKFURT, Germany (AP) _ A consortium of German banks rescued east Germany’s largest hotel chain, Interhotel, with nearly 3 billion marks ($2 billion) in loans, officials said Thursday.
The effort, headed by Deutsche Bank and finalized Tuesday, was intended to prevent further damage to the property market in Berlin. Deutsche Bank is Germany’s largest commercial bank.
A property boom was expected after the government announced it was moving the German capital to east Berlin from Bonn. But that move is now not expected to be completed until 2000.
In addition, office rental in the area have plunged over the past four years, troubling property developers.
Klaus Groenke and Axel Guttman acquired Interhotel in 1991 from the Treuhand privatization agency for 2.1 billion marks ($1.45 billion), in one of the biggest eastern German privatizations at the time.
As property prices fell, the owners ran up debts of more than 3 billion marks ($2 billion).
Deutsche Bank, its subsidiary, Frankfurter Hypotheken Bank, the Depfa mortgage bank and a few smaller banks will take over ownership of the chain of 23 hotels.
According to a Deutsche Bank statement, Groenke and Guttman will continue to hold stakes, but Interhotel manager Dieter Schwann would not disclose what stake that would be, as reported in the Financial Times.