Lehman closes in on Le Meridien

INVESTMENT bank Lehman Brothers is close to taking control of 126 overseas hotels in the troubled Le Meridien chain.

Lehman is lining up hotels operator Hyatt to run the business. The pair will provide £100m of equity.

A further £50m of working capital will be injected into the group - £10m from Lehman and £40m from other banks and creditors.

If the deal comes off, it will stymie Guy Hands, whose private equity firm Terra Firma was jointly backing a £150m rescue package in conjunction with Saudi billionaire Prince al-Waleed bin Talal.

Lehman's proposal does not include 11 luxury hotels in the UK, including the flagship Grosvenor House and Waldorf in London, which are owned by the Royal Bank of Scotland.

The Scottish bank could put the hotels into administration, but is also believed to be looking at bringing in an alternative operator to manage the properties.

Hilton and Marriott have been touted as possible partners.

Venture capitalist Hands led the £1.9bn buyout of the luxury chain on behalf of Japanese bank Nomura two years ago. But it has struggled to service its £1bn debts.