Leela seeks shareholder nod to sell Chennai, Delhi hotels

Loss-making luxury hotel company Hotel Leelaventure is seeking shareholder's nod to sell Chennai and Delhi properties in a desperate bid to reduce its mounting debt.

The company today issued a postal ballot notice to its members seeking their approval to sell either one or both the properties.

Both the luxury properties are relatively new compared to older hotels it has in Mumbai, Bengaluru and Goa. Delhi property was opened in 2011 while the Chennai hotel was opened in 2013.

This will be the third such sale by the Nair-family led Hotel Leela in five years. From a total of seven properties, Leela's ownership was down to five by the end of 2015-16. The Mumbai-based company sold and subsequently took on management contract the Kovalam and Goa properties.

"The company has been seeking a viable restructuring package from its lenders, but the lenders have advised that the debt level of the company be reduced. The company has already reduced its debt by selling the Goa hotel. The company has been in discussion with the lenders in relations to steps for further reduction of debts", said the company in a disclosure sent to BSE.

As of the end of last financial year, Hotel Leela's debt stood at Rs 4,300 crore, the primary reason behind its consistent losses. Like the Tata Group-promoted Indian Hotels, Hotel Leelaventure hasn't realised profits since 2011-12.

JM Financial Institutional Securities has been given the exclusive mandate as financial advisor for the sale of Chennai and Delhi properties. Like Goa and Kovalam Hotel Leela will likely take these two properties on management contract after concluding sale.

Located at Adyar Sea face, The Leela Palace Chennai has a capacity of 326 rooms while the Chanakyapuri-located The Leela Palace New Delhi has capacity of 254 guest rooms. The company is estimated to have paid more than Rs 2,500 crore to build both the hotels (Delhi Rs 1,800 crore and Chennai Rs 750 crore).

Expressions of interest are invited from interested parties by way of advertisement/invitation. A bid process will be undertaken where expressions of interest received will be duly evaluated based on factors including consideration mode of payment, terms and conditions attached to the sale, terms of management contract and other relevant aspects.

It is also seeking shareholder approval to increase limits for making investments, give loans, guarantees and provide securities beyond the prescribed limits.

Further It has also started to monetise land in Hyderabad's prime Banjara Hills area, which could fetch the loss-making company around Rs 150 crore. Last month, it signed an agreement with Qatar's Al Faisal Group to sell a 6.5-acre lot.

It has also commenced work on developing high-end residences next to the Leela Palace, Bengaluru, where apartments are presently being sold. The company entered into a joint development agreement with Prestige Developers for the project.