THE BYRNE Hotel Group, which owns three hotels in Galway, is in talks with its banks over debts of more than €43.5 million.

The company does not expect to be able to make any capital repayments over the coming years and is in discussions to put all loans on an interest-only basis for five years, according to recently filed accounts for its group holding company R Byrne Concrete Ltd,

The group owns the Victoria Hotel, the Eyre Square Hotel and the Salthill Hotel, all in Galway, as well as the Metro Hotel in Leicestershire, England, and other property. It is owned by Richard and Sandra Byrne, of Salthill, Galway.

The group banks with Anglo Irish Bank, AIB, Permanent TSB Bank and KBC Bank. AIB is by far its largest lender.

Accounts for the year to the end of August 2009, filed recently, state that the company lost €1.38 million, despite a profit of €1.5 million from the disposal of assets.

“It is likely that further losses will be incurred in the coming years,” according to the accounts, which are dated September 28th, 2010.

The notes to the accounts state that AIB loaned €34 million to fund the extension and redevelopment of the Salthill Hotel and a further €1.85 million after balance sheet date to complete the project.

The accounts say that once the hotel becomes fully operational it will generate additional income. The group is also committed to an asset disposal programme. A number of “prime properties” have been placed on the market.

These developments, coupled with the negotiation of interest-only repayments to the banks over the coming five years “should facilitate the structured reduction of the company’s debt”.

The company receives gross rental income of approximately €2.6 million from group companies and the notes state it is vital that there is a minimum rent default in the coming period.

“In the opinion of the directors the main risks and uncertainties faced by the company relate to the oversupply of commercial property including hotels in Galway [and how] this could impact on the stability of rental income particularly from its leased hotels.

The company has written off a $1 million investment in the Anglo Irish Bank New York Hotel Fund, which the accounts note has “grossly underperformed”.

The investors in the fund are seeking legal advice on Anglo’s invitation to join the fund, the accounts note.

They also note that the company owns one half of the Bunree Partnership which bought a nine-acre site at Bunree Road, Ballina, Co Mayo. Funding came from Anglo and Mr Byrne personally guaranteed the loan for an amount of €2.5 million. The company invested €1.35 million in the partnership up to the balance sheet date. In June 2009 planning permission was granted for 80 residential units on the site.

AIB holds a number of charges relating to the company including one over units at the Liosban Office Park, Tuam Road, Galway. It also has a solicitor’s undertaking in relation to the sales proceeds from units at the park.

The bank also has a legal charge over a commercial investment property at Eglinton Court, Eglinton Street, Galway and an 8,000sq ft site adjoining the Victoria Hotel.

KBC Bank holds a charge over the 97-bed Metro Hotel, in Appleby Magna, Leicestershire, and Tara Buildings, Tuam Road, Galway. It also holds guarantees from Mr and Ms Byrne over all sums due. The Metro Hotel was bought for £6 million in 2007.

Anglo holds a legal charge over units at Liosban as well as over the New York investment and other security. A loan facility from it of €2 million is repayable on demand and without any reason having to be given.

R Byrne Concrete does not produce consolidated accounts and the total number of staff employed in the group’s hotel operating companies is not known.

Hayside Ltd, which Mr Byrne owns in partnership with Basil Keane, of Newcastle, Galway, saw its accumulated losses rise to €1.26 million from €346,631 in the year to January 31st, 2010, according to abridged accounts filed recently.

In June 2008 the EBS registered charges for €1.6 million against Hayside in relation to ten apartments in Hatton Garden, Liverpool.