Fairhold, a part of a complex group of companies that own the freeholds belonging to the Tchenguiz Family Trust have just reported truly dreadful accounts for last year.
Despite Fairhold directors increasing the valuation of their property portfolio by 96m pounds, they managed to record an operating loss of 288m pounds!
Additionally in October 2015 they defaulted on loans totalling 443m pounds, which triggered a cancellation by the banks of a swap instrument used to protect against inflation and interest charges. The default penalty interest rate for this loan is now between 5.7% and 6.7 %
There is a significant dispute as to the penalty for the cancellation of the swap arrangement. So far apart are the figures from Fairhold and the banks, that the auditor has had to qualify his financial statement.
In essence Fairhold believe they are liable for penalties of 361m pounds, the banks argue the figure should be 592m pounds.
As if that were not enough, even though it might seem small change compared to the debts that are in default, Fairhold are also in default for an emergency loan of 25m pounds, that with interest has now grown to 41m pounds.
The default penalty interest for this loan has increased to 13%
In a further twist of the financial knife Fairhold loans have just been downgraded, to "high risk of further default" with a possible 80% recovery rate for the 443m pound loan and a 0% recovery rate for the 41m pound loan.
Currently Fairhold , though still owned by the Tchenguiz Family Trust is in reality being managed by GLAS Trust , who are a commercial debt management company.
