Marylebone Warwick Balfour Group Plc Acquires Full Ownership Of Malmaison Brand From Rezidor SAS

MWB will take responsibility for operational management of the Malmaison hotels during the next six months and is, therefore, pleased to announce that former Regal Hotels Group Managing Director Charles Holmes has been appointed Chief Executive of Malmaison. He will join the Group later this month and complement the existing Malmaison operational management team.

As a result MWB now has complete ownership of this successful UK-based hotels business, including the operational management, and has enhanced the value of the Group's Malmaison holding.

Under the terms of the purchase MWB is paying an initial £4m cash with the remaining £9m payable in 12 equal monthly payments commencing September 2003. In addition the Group has repaid a £16m mezzanine loan from Rezidor from its existing facilities.

In November 2000 MWB acquired all the Malmaison Hotel properties and, in joint venture with Rezidor, 50% of the Malmaison brand owning company. As part of those arrangements Rezidor received a fee for managing the hotels of £1.5m a year rising to £2m a year by the end of 2003. This fee will now no longer be payable following completion of the transaction announced today.

When MWB first acquired its interest in Malmaison, the company operated five hotels providing a total of 460 rooms. Since then, a successful development programme has already increased the number of rooms to 556 and will rise to 850 by the end of 2003.

The near doubling of Malmaison rooms has been achieved through the expansion of the two existing hotels in Edinburgh and Manchester and development of new hotels in Birmingham and Charterhouse Square, in the City of London.

Further expansion is anticipated through development of another three UK hotels, planned for, Oxford, Liverpool and Brighton, which would take total rooms to approximately 1,200.

In May 2002 Malmaison entered into a £110m financing agreement with Bank of Scotland to refinance the existing portfolio and provide development funding for new projects. This has enabled MWB to conclude the acquisition from Rezidor.

Gary Gerrard, Bank of Scotland Director of Corporate Banking, said: 'Malmaison is a superb brand and we are delighted at becoming its principal funder. The Rezidor transaction will create further shareholder value within Malmaison and we look forward to supporting the future development of the Group.'

Joe Shashou, MWB Director of Hotels, said: 'By acquiring full ownership of the Malmaison brand and buying back the operational management contracts MWB is taking full control of the country's premier lifestyle boutique hotel chain. This acquisition further underlines our stated strategy of maturing and enhancing Group assets.

'Since we acquired our interest in Malmaison two years ago we have made tremendous progress in developing the chain which continues to flourish and consolidate its position as market leader in its sector.'