Tourism giant Stella at risk of collapse

The Stella Hospitality Group owns hotel rooms and travel agencies around the world.

Travel Insurance News - 23/04/2009

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Among the group’s holdings are the Harvey World Travel chain and at least twenty per cent of all holiday apartments on Australia’s Gold Coast.

Insiders have said that the tourism empire is in danger of collapse, which would potentially cost UBS, the banking giant, hundreds of millions of dollars.

UBS and private equity firm CVC Asia Pacific reportedly lost as much as $1 billion on Stella already, after acquiring a two-thirds share of the financially-struggling group in 2008, from Gold Coast financier MFS, which has since failed.

In the deal UBS and CVC Asia Pacific each invested $1.3 billion in Stella, which has under its control up to 21,000 hotel rooms and 1,200 travel agencies around the world. According to experts, the value of that investment is now only $250-350 million.

The Stella group denied on Thursday that there has been any advice to appoint receivers. "Stella group rejects outright any suggestion that a recommendation has been made to appoint receivers,'' said CFO Elizabeth Gaines.

Gaines asserted through a spokesman: “It is unequivocally completely false. It is business as usual.”

The Australian has learned, however, that accountants close to UBS are recommending that Stella be placed in receivership, or its assets immediately sold, in order to prevent further losses.

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