Forte to run CIGA hotels: 'Money from day one' in rescue deal for Italian luxury chain

FORTE, the international hotels and restaurant group, is to take over management of the Ciga chain of luxury hotels as part of the Italian company's financial restructuring.

Ciga, formerly owned by the Aga Khan, has debts of pounds 650m and has been run by Mediobanca, the Italian merchant bank, which was called in by creditors earlier this year.

Under the plan, which Forte has been negotiating since June, Ciga will be divided into an operating company and a property company. Forte said it would contribute pounds 33m cash towards investment by the new-look Ciga operating company, and place 'certain' of its Italian hotels, worth about pounds 125m, within the business.

In return Forte will have the management of the Ciga hotels and a majority interest in the restructured Ciga operating company.

Ciga's bank debts will be transferred into a separate holding company in which the Ciga operating company will have an equity stake of between 10 and 15 per cent.

Rocco Forte, chairman, said his company would have the option of buying some of the hotels in five years. 'For the moment we are effectively leasing them and providing knowledge and expertise to help Mediobanca run the hotels.' He added that Forte would 'be making money from the hotels from day one'.

Ciga owns some of the world's most luxurious hotels, including the Danieli in Venice and Excelsior in Rome. It has a total of 35 hotels throughout Europe and in the United States and Japan, but the company has had a number of owners in recent years, most without experience in the hotel industry.

The chain was founded in 1906 by members of the Venetian nobility, and has been listed on the Milan stock exchange since 1921. The company was bought by the Aga Khan in 1985, from the Genoese/Swiss financier Bagnasco.

Mr Forte said the restructuring should be completed by the end of this year. 'We have agreed certain things in principle with Mediobanca, and now we go into a process of due diligence. We have a long way to go.

'Ciga are wonderful hotels by any standards and they will be an excellent fit into our hotel network,' he added.

'Problems had been building up at Ciga for some years. A lot of investment and acquisitions were made at the height of the property boom. pounds 650m in debts is unbelievable for a company of that size.'

The Ciga chain accounts for 23 per cent of the total number of five-star hotel rooms in Italy. Forte, which operates 800 hotels in 37 countries, runs its luxury outlets under the Exclusive Collection and Forte Grand names.

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