Hotel Leelaventure, which has been long trying to sell stake in two of its projects in Delhi and Chennai to reduce its debt burden, said it would continue to hold a minority stake in each of the project even after the sale. The hotel major feels that the next six months to one year will be right time for the company to divest.
"We are only bringing in bridge finance till we can disinvest and reduce our debt. The economic environment earlier was not suitable for disinvestment and the valuations were also quite low for the investments we made. But now we are seeing increased valuation of our hotels and I think the next six months to one year will be the right time to disinvest," said Vivek Nair, chairman and managing director, Hotel Leelaventure.
Elaborating, Nair also said the economic situation is improving and has started reflecting in the valuations his company is getting at present. "We are now being offered close to what we had invested. There is strong optimism in the tourism industry," he said.
Nair said the company is in discussion with sovereign funds and institutional investors who can invest in the properties. The company, however, will not be disinvesting 100% of its units and would instead spin off into a special purpose vehicle (SPV).
"We would continue to operate the hotels under our own flag since the financial investors wants us to manage the properties. We will disinvest about 70-75% of these units while keeping the rest of it with us.
We are looking at only two hotels which can meet our debt obligation. Besides, we are also using other non-core assets for debt reduction," he said.
The company has recently informed that the majority of lenders have sold off its debt to JM Financial Asset Reconstruction. As on June 30, the company has a debt of about Rs 5,000 crore of which about Rs 4,000 crore stood with the corporate debt restructuring (CDR) lenders. Out of 17 lenders in the State Bank of India-led consortium of banks, 14 lenders with exposure to about 97% of the total CDR has assigned the debt in favour of JM Financial Asset Reconstruction on June 30. The company has also been informed that the CDR Empowered Group has approved the exit of the company from CDR in a meeting held on June 28.
The company currently operates eight properties in New Delhi, Gurgaon, Udaipur, Goa, Mumbai, Bangalore, Kovalam and Chennai. New hotels are coming up in Noida, Jaipur, Agra and Lake Astamudi in Kerala. In Agra and Lake Astamudi, Nair said his company owns the land. "We would be managing the properties in these two markets although we have an equity stake there," he said.
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