Poultry Defaults on ?72M Loan for '6-Star' Hotel

Poultry Development, a Russian-owned firm planning to build a six-star hotel in London's financial district, defaulted on a ?72 million ($104 million) loan secured against the property.

Poultry missed a Jan. 26 deadline to repay the loan and appointed Grant Thornton as administrators, according to a creditor's statement to the Irish Stock Exchange on Thursday.

Vladimir Chernukhin, a former deputy finance minister and ex-chairman of Vneshekonombank, paid ?72 million in 2006 for the former Midland Bank headquarters, which featured in the James Bond film "Goldfinger," and won planning permission to turn the building into a luxury hotel.

"We expect to see many more defaults," said James Martin, an asset-backed debt analyst at Merrill Lynch in London. "As loans come due, they will have to be restructured or worked out unless the borrower or a new owner is prepared to put more money in."

Poultry's senior loan, totaling ?55 million, was packaged into commercial mortgage-backed bonds sold by Credit Suisse Group through special-purpose company Titan Europe 2007-3, Moody's Investors Service said in July 2007.

The building at 27-35 Poultry, designed in the 1920s by architect Edwin Lutyens, is vacant except for security staff. It featured in the 1964 James Bond movie starring Sean Connery, according to a press release from law firm Mischon de Reya, which advised on its sale in 2006.

Martin estimates that the property opposite the Bank of England may be worth ?20 million to ?40 million.