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Lehman Brothers is planning to form a joint venture with US property fund Starwood Capital to buy the Le Meridien hotel chain, according to reports this week.
The upmarket group, which has 130 properties in 56 countries, is already heavily in debt to Lehman which effectively controls it.
Analysts say it would take about £1bn to acquire Le Meridien but only about £300m would be new capital, the rest from debt.
None of the parties involved would comment.
Earlier this month Lehman Brothers Real Estate Partners was part of a consortium which paid £1bn for 73 of InterContinental Hotels' UK properties.
Starwood Capital is separate from Starwood Hotels which operates the Sheraton, Westin and “W” brands but is chaired by the same person, Barry Sternlicht.
Starwood Capital bought 11 UK properties from Hilton International this month for £120m and has hotel interests in America.
Le Meridien, founded by Air France in 1972, swapped owners several times before being bought by Nomura International in July 2001.
The chain was badly hit by the post-9/11 slump and fell heavily into debt after a £1.25bn sale and leaseback deal with the Royal Bank of Scotland.
The Royal Bank took back control of 11 of its UK properties including the flagship Grosvenor House in Park Lane, London after Le Meridien failed to meet its rental payments.
Under a deal in 2004, Lehman Brothers took on its multi-million pound debt.
Starwood Hotels also took on some of this debt and has been named as a possible operator of Le Meridien's portfolio if any sale goes ahead.