Stella group Credibility in question

Consumer travel News: The financial credibility of Stella Group which owns in the UK, Global travel group and travelbag is in the news again.

Bankers UBS, which are owed about $900 million, is understood to have appointed consultants to review its exposure to the troubled group.

UBS spokeswoman Caroline Gurney declined to comment when asked about the appointments.

You have to ask are they credible? After they have been placed under extreme pressure by a series of hard hitting financial reports from award-winning journalist Anthony Klan in The Australian .

Those reports describe an unprofitable conglomerate with excessive debt facing a moment of truth with its banker, UBS, which is reportedly owed A $900m.

Private equity group CVC Asia Pacific bought 65 per cent of Stella — which owns the Harvey World Travel tourism group and manages one in five Gold Coast holiday apartments — from the now collapsed MFS for $409 million, with UBS assuming $905 million of debt in the deal.

That outlay, which valued Stella at about $1.5 billion, is understood to have bled hundreds of millions of dollars and left both CVC and UBS exposed to massive potential losses.

Both CVC and UBS refused to comment on the contents of the accounts.

According to those accounts, GVH delivered a $42 million loss in the six months to June. Since then the global tourism market has been severely affected by the financial crisis.

Economic conditions have only deteriorated since then so a lot of people are drawing what they consider to be the obvious conclusion – that things have gotten worse for the Stella Group, 65% owned by CVC Asia Pacific, although spokesperson Susan Boyd has publicly claimed that: “There’s been no slowdown yet.”

However, she is talking about actual businesses, rather than the corporate entity – and that is a very important distinction because the kind of debt reportedly being carried by Stella Group requires an awful lot of money to service…