Leela to sell shares to promoters

The company's lenders have also accepted its proposal to restructure the debt

Hotel Leelaventure, owners of the chain of luxury hotels under the 'The Leela' brand, will make a preferential allottment of equity shares to the promoter company Leela Lace Software Solutions of up to Rs 100 crore.

A board of director's meeting was held in this regard yesterday to get an approval. Besides the Mumbai-based company also stated that the corporate debt restructuring (CDR) empowered group headed by the lenders of Leela has accepted its proposal to restructure the debt.

"The shareholders of the company at the annual general meeting held earlier in the day approved the allotment of equity shares of upto Rs 100 crore to Leela Lace Software Solutions, a promoter group entity on preferential allotment basis at a price determined in terms of Sebi ICDR regulations on the relevant date, i.e August 21 2012 being the 30 days prior to date of the AGM", stated the release of the company.

In terms of the Sebi ICDR Regulations, the applicable price per share is Rs. 32.44 and accordingly the said promoter group entity is entitled to receive 3,08,26,140 equity shares of Rs 2 each at a premium of Rs 30.44 per share.

The debt laden company whose financial performance is getting burdened by the hefty interest payouts every month on the nearly Rs 4,300 crore debt is trying to find ways to trim the debt. This includes sell off of non-core assets like land and office space and entering new management contracts for further expansion.

The company will also raise upto Rs 1,000 crore through one or more instruments to meet capital expenditure, expenditure for renovation, expansion, brand building and to pursue new organic and inorganic growth opportunities. The company recently opened its newest property in Chennai facing the sea.

Further monetisation of three land assets and an office space are considered by the company located in Pune, Hyderabad, Bangalore and Chennai. Valuation of these properties exceed Rs 700 crore, as per market estimates. Commercial property in Chennai is the Leela Business Park located next to the luxury hotel.

Newer segment that of four or five star properties in Tier II  locations is also being explored by the company. In addition, management contracts for nine new properties are actively considered by the company including a project in Jaipur where it has already signed the contract and in the capitals of Bangladesh and Sri Lanka.

The company also owns land in Agra (facing Taj Mahal) and Ashthamudi, Kerala. At both the centers it has decided to build a luxury hotel and resort, respectively, in collaboration with an investor, though it is yet to finalise the deals.