Barthélemy owner denies it forced company to sell shares below value

Photo: Facebook Le Barthélemy Hotel & Spa
Le Barthélemy. Photo: Facebook Le Barthélemy Hotel & Spa

Le Barthélemy, St Barts’ first new-build hotel in twenty years, opened in April. The accommodation with 600 feet of beachfront on the Grand Cul de Sac offers 46 “supremely luxurious” rooms, suites and villas, designed by Sybille de Margerie, whose resumé includes the Hotel de Paris in St Tropez and Courchevel’s Cheval Blanc.

The owner of the luxury hotel development, who is in the process of suing asset management Duet Group Ltd. for around €37.5 million ($44 million) “over debts it is allegedly owed for the hotel’s construction”, has denied that it “forced Duet to sell its shares in the development at a fraction of their market value”.

According to official papers filed last month – case Barthelemy Holdings LLC v. Duet Group Ltd., case number CL-2017-000370, in the High Court of England and Wales – Barthelemy Holdings LLC, which is suing Duet Group on claims that “the €67.5 million cost of building luxury five-star hotel Le Barthelemy Hotel and Spa was €37.5 million more than was estimated”, dismissed Duet’s counterclaim that it “conspired to unlawfully force the asset manager to sell its shares below their true value”,

The Duet Group, which is represented by Mischon de Reya LLP, refutes the claim that it is liable to Barthelemy for the rising cost of the hotel and asserts that it’s owed up to €14.5 million in damages.

LAW360 reports that “Duet alleges that Barthelemy breached its duty of cooperation by encouraging private equity firm Colony Capital, which provided a loan to finance the construction through a fund known as Colfin Grand Cul de Sac Funding, to take possession of Duet’s shares in the project”.

“Even if all of Duet Group’s factual and legal allegations were true, it would have no claim,” Barthelemy, represented by Brian Doctor QC and Giles Robertson Fountain Court, and Ropes & Gray International LLP, claimed in papers filed with the High Court in London on September 29.

Photo: Facebook Le Barthélemy Hotel & Spa
Le Barthélemy. Photo: Facebook Le Barthélemy Hotel & Spa

To comply with Colony’s lending requirements, a company – Saint-Barth Drep 1, or SBD1 –was established to hold Barthelemy and Duet’s shares in Saint-Barth Drep Hotel Invest, a French company that owned the site for the hotel and was wholly owned by a company controlled by Duet.

Although a shareholder agreement was entered into with Barthelemy and Duet each holding a 50 percent stake in the company, in 2014, according to court papers, “a new investment agreement made provision for further financing of the hotel and capitalization of SBD1 by Barthelemy alone, along with new governance of the company. After that, Barthelemy owned 78.75 percent of the shares”.

According to LAW360: Duet, later defaulted on debts owed to Colfin in connection with the development of two villas located near the hotel. Colfin enforced pledges given by Duet over shares in DTFS and became its sole legal and beneficial owner, and indirectly of SBD1.
This led to Barthelemy acquiring all of the shares in Colfin from Colony, giving it a 100 percent holding in SBD1.

Barthelemy alleged in its original claim filed on June 12 that “a €29.9 million budget for building the hotel prepared in 2014 by Duet Trust and Fiduciary Services SA., a Luxembourg company then connected to Duet Group, vastly underestimated the true cost of construction.

Because of the falsity of the information, Barthelemy alleges it suffered loss and damage in that its indirect shareholding in the hotel was worth less that it would otherwise have been”.

In papers filed on August 11, the Duet group alleged that it wanted to build “an equivalent five star hotel,” whereas Barthelemy wanted to build “the best hotel on the island” even if it took longer and cost more money. (Source Law360)