Facebook Pixel Code

Hotel Leelaventure to sell 4 hotels to Brookfield to repay debt

The debt-laden Hotel Leelaventure on Monday entered into a binding agreement with Canadian Private Equity major, Brookfield Asset Management Private Real Estate Fund to sell its four hotels and hospitality operations business for `3,950 crore on a slump sale and going concern basis.

Hotel Leelaventure to sell 4 hotels, ops to Brookfield
Hotel Leelaventure to sell 4 hotels, ops to Brookfield

The debt-laden Hotel Leelaventure on Monday entered into a binding agreement with Canadian Private Equity major, Brookfield Asset Management Private Real Estate Fund to sell its four hotels and hospitality operations business for `3,950 crore on a slump sale and going concern basis.

As part of the deal, Hotel Leela Venture will sell its four hotels in Bangalore, Chennai, Delhi and Udaipur, along with the hotel operations business, and 100% shareholding in Leela Palaces and Resorts, which owns property and holds licences for the development of a hotel in Agra. The shareholding of the company will remain unaffected post the completion of transaction, the company said in a statement.

The proceeds of the deal, which will also see the company’s owners transfer the ‘Leela’ brand to Brookfield for all hospitality businesses, will be used to repay existing lenders of the company. “After completion of the aforesaid transaction, all borrowings of the company from all banks and financial institutions would stand repaid,” the company said.

As per Bloomberg data, Hotel Leelaventure owes lenders `3,781 crore as of March 2018. The transaction also includes assignment of all hotel management contracts currently in operation as well as all management contracts for hotels, which are currently under development, along with the employees of the hotels.

In addition, The Leela will transfer its leasehold rights for a land parcel measuring 24,404 square metres situated at Old Airport Road, Bangalore. This will be by the way of a fresh lease from Leela and cancellation of the existing lease with the company, it said.

READ ALSO | Anil Ambani saves himself from jail; settles Rs 550 crore Ericsson dues

However, the company will continue to operate the hotel in Mumbai and own certain land parcels in Hyderabad. It will also operate the joint development project of residential apartments with Prestige Developers in Bangalore. While Brookfield will have a right of first refusal over the company’s hotel in Mumbai, as a part of the transaction, the company said.

In 2014, Hotel Leela Venture had transferred its loans from 14 creditors to asset restructuring firm JM Financial ARC post failure of its corporate debt restructuring plan. In September 2017, it allotted over 160 million shares worth around `275 crore to JMARC on conversion of debt to equity. JMARC owns 26% in Hotel Leela Venture.

JM Financial was the financial advisor to Hotel Leelaventure for this transaction.

Ankur Gupta, MD and Head-India Real Estate, Brookfield Asset Management, said: “We… look forward to completing this transaction at the earliest, while ensuring that all operations remain unaffected. We expect the Leela hotels to continue to be market leaders.” The deal is subject to shareholder and other regulatory approvals. On Monday, the stock price of Hotel Leelaventure closed the session 1.09% up at `11.08 on the Bombay Stock Exchange (BSE).

Get live Share Market updates, Stock Market Quotes, and the latest India News and business news on Financial Express. Download the Financial Express App for the latest finance news.

First published on: 19-03-2019 at 01:19 IST
Market Data
Market Data
Today’s Most Popular Stories ×