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Debt ridden Hotel Leela Venture expects to receive Rs 620 crore from sale of non-core assets.
Debt ridden Hotel Leela Venture expects to raise Rs 620 crore by selling non-core assets.
The company, which operates luxury hotels and resorts, has a debt of around Rs 4,000 crore on its books.
For instance, it expects Leela Business Park in Chennai to be sold in the next six months and Leela hopes to raise Rs 200 crore from the sale, Vivek Nair, vice-chairman and MD, told CNBC-TV18 on Wednesday.
Hotel Leela also plans to sell land parcel in Hyderabad, he said. The company had 3.85 acres of land at Banjara Hills in Hyderabad, where it had initially planned a luxury hotel, but shelved the plans after significant new supply came up in the area.
It also sold its Kovalam property this year and took it back on management contract.
Lenders recently approved Hotel Leela's corporate debt restrcturing (CDR) package. As per the CDR package, the company will be debt free by the end of the financial year 2013. As a part of the deal the promoters have to bring Rs 200 crore and Nair said promoters have already bought in Rs 100 crore to date.
Hotel Leela had last month announced a fund raising of Rs 1,100 crore, and Rs 100 crore worth preferential allotment of equity to promoter group firm Leela Lace Software Solutions. It also got a 24 months moratorium for outstanding principal amount of Rs 3,000 crore and 23 months moratorium for interest.
It had posted a net loss of Rs 102 crore in the first quarter.
Hotel Leela shares were up near 6% at Rs 35 on NSE in morning trade on Wednesday.
Below is the edited transcript of Nair’s interview with CNBC-TV18.
Q: How will capital and debt look at the end of the year? There is a preferential allotment of equity shares to promoters as well you have negotiated a CDR package with bankers so what is the equity dilution and will you pare down debt with the money how will your debt look by March 31?
A: The CDR package has been finalised and as part of that, it envisages equity infusion the promoters are to bring in Rs 200 crore out of which we have bought in already Rs 100 crore. That will take our equity to about 64 percent of the total equity of the company; it will be done through preferential allotment of share.
We envisage that once the equity market picks up and hopefully the present trend will continue, we will be bringing in additional amount by way of QIP or FCCB as the case may be and that will bring in another Rs 1,500 crore- Rs 2,000 because the market price being low, we could not convert USD 200 billion of FCCB.
We have redeemed those now, so the gap of that USD 200 million - about Rs 1000 crore will be made up partly by way of promoters’ contributions as well as through QIP, rights issues and FCCB.
We also envisage the Leela business park, which is part of the hotel complex in Chennai to be offloaded. That will be done in the next six months. We expect to do that by December and along with our non core assets the land parcel in Hyderabad. The hotel industry in Hyderabad is facing a rough time because of local disturbances.
In Pune there is an over built situation as far as the demand supply of rooms go, for Pune we have a joint venture with local developer. In the next three years our share of the JV will come to us and the same in Bangalore also. We have two acres of land next to our hotel so we are planning to put up Leela Residence, so even that amount of the JV will come to us.
Hotel Leela stock price
On April 23, 2014, Hotel Leela Venture closed at Rs 20.15, down Rs 0.4, or 1.95 percent. The 52-week high of the share was Rs 22.00 and the 52-week low was Rs 14.00.
The latest book value of the company is Rs 27.22 per share. At current value, the price-to-book value of the company was 0.74.
READ MORE ON Hotel Leela, sale, non-core assets, Chennai, Hyderabad, CDR, Vivek Nair, vice-chairman, MD
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