Last-ditch talks to save Meridien from collapse

Meridien, the beleaguered hotelier, will today hold crisis talks with its bankers in a last-ditch bid to get backing for a rescue bid by Guy Hands to avert financial collapse.

Mr Hands, the corporate financier, has teamed up with Prince al-Waleed, the Saudi billionaire, to put together a £150m salvage offer.

An initial offer was rejected on Friday night, but talks between the management, Mr Hands and representatives of Meridien's creditors continued into the weekend.

The privately-owned hotel group has been teetering on the brink for the past two weeks, since it missed a £20m rent payment to Royal Bank of Scotland, which owns 11 of the group's London hotels including the Grosvenor House and the Waldorf.

It is understood that Mr Hands' investment vehicle, Terra Firma, has offered £150m, of which £120m would come from the Saudi prince.

The deal would require RBS agreeing to forego some of its rent payments while the banks, which hold £800m of senior debt, would have to write off some of their debts. The banks include Merrill Lynch and CIBC.

Sources close to the talks said a second option, which is put forward by Lehman Brothers, the investment bank that has a £200m mezzanine debt holding.

This would see RBS retaining its hotels while management of the core 130 Meridien hotels would be handed to Hyatt, the US hotels group.

However, if both offers are rejected it is almost inevitable that the company will be put into administration. According to reports at the weekend some of the banks are priming insolvency lawyers ahead of that outcome. An administrative receiver would keep the business running as a going concern while new bidders were sought.

RBS would oust Meridien from its 11 properties and seek a new hotel partner, expected to be either Marriott, Hilton or Accor.

Hilton, a UK hotelier, is understood to have discussed carrying out a deal in partnership with Simon Ruben, the wealthy metals trader.