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Ten million dollars sounds small in a $300-million deal. But not when it’s the sale of Aman Resorts, the chain of 25 hotels worldwide set up by Indonesian businessman Adrian Zecha and taken over by Indian real estate developer DLF five years ago.
Aman, which was in principle bought back by founder Zecha last December after DLF put it on the block as part of its non-core assets, is once again in the market looking for bids. But not before Zecha, believed to be hard-pressed for funds, had made an initial payment of $10 million towards the deal, that was announced by DLF some eight months ago but never concluded. It’s that amount, argue people aware of the development, that binds Zecha to the chain he had created, as a new round of valuation has kicked off.
Zecha might be trying to bring down the deal value from what was worked out last year, given the slowing global economy and a rather dry merger and acquisition scene, according to sources. DLF, on the other hand, is eyeing “good valuation”, pointed out real estate analysts. While Zecha has lost the exclusivity for the transaction after it missed the payment deadline, experts say bets are still high on the Indonesian hotelier buying it out. Even as DLF is in negotiation with a few more private equity and hospitality companies, Zecha’s leading the race as he tries to ensure he doesn’t lose his $10 million and months of effort in striking the deal.
Pointing out at an earnings call last week that Aman operations had turned profitable for the first time, DLF group chief financial officer Ashok Tyagi cited improved operations and better forex translation as the primary reasons. Zecha could not be contacted for a comment to this story. The Singapore-based corporate office of Aman Resorts did not reply to a questionnaire on the sale of assets.
According to the DLF top management, even without the Aman sale, the company’s debt reduction goals could be achieved. However, officials maintained that non-core will remain non-core and Aman forms an integral part of the group’s divestment strategy towards debt reduction. Zecha is a seasoned man and with years of experience behind him, it would be a surprise if he is not able to fructify the deal, an analyst tracking DLF said.
Aman Resorts was on the block for about two years before the deal with Zecha was announced for around $300 million, the same price at which DLF bought it in 2007. Aman hotel in Delhi, a seven-acre property, is not part of the sale deal.
Aman, which was in principle bought back by founder Zecha last December after DLF put it on the block as part of its non-core assets, is once again in the market looking for bids. But not before Zecha, believed to be hard-pressed for funds, had made an initial payment of $10 million towards the deal, that was announced by DLF some eight months ago but never concluded. It’s that amount, argue people aware of the development, that binds Zecha to the chain he had created, as a new round of valuation has kicked off.
Zecha might be trying to bring down the deal value from what was worked out last year, given the slowing global economy and a rather dry merger and acquisition scene, according to sources. DLF, on the other hand, is eyeing “good valuation”, pointed out real estate analysts. While Zecha has lost the exclusivity for the transaction after it missed the payment deadline, experts say bets are still high on the Indonesian hotelier buying it out. Even as DLF is in negotiation with a few more private equity and hospitality companies, Zecha’s leading the race as he tries to ensure he doesn’t lose his $10 million and months of effort in striking the deal.
Pointing out at an earnings call last week that Aman operations had turned profitable for the first time, DLF group chief financial officer Ashok Tyagi cited improved operations and better forex translation as the primary reasons. Zecha could not be contacted for a comment to this story. The Singapore-based corporate office of Aman Resorts did not reply to a questionnaire on the sale of assets.
According to the DLF top management, even without the Aman sale, the company’s debt reduction goals could be achieved. However, officials maintained that non-core will remain non-core and Aman forms an integral part of the group’s divestment strategy towards debt reduction. Zecha is a seasoned man and with years of experience behind him, it would be a surprise if he is not able to fructify the deal, an analyst tracking DLF said.
Aman Resorts was on the block for about two years before the deal with Zecha was announced for around $300 million, the same price at which DLF bought it in 2007. Aman hotel in Delhi, a seven-acre property, is not part of the sale deal.
Kim Eng Securities analyst Anubhav Gupta said the company should focus on funds rather than the valuation of the deal as it could be hard to sell Aman in these market situations.
DLF’s debt stood at around Rs 20,320 crore at the end of June quarter. It is targeting to bring it down to Rs 17,500 crore by the end of current fiscal, with or without the Aman deal.
But analysts, who did not want to be named, said the company may have to revise its debt target, if DLF is not able to find a new party soon for Aman.
The company on August 12 reported a 38 per cent decline in consolidated net profit at Rs 181.2 crore for the quarter ended June 30 against Rs 292.8 crore in the year-ago period.
