Hotel Leela wraps up FCCB buyback

Hotel Leelaventure Ltd has successfully completed the second round of FCCB buyback in line with the foreign currency convertible bonds (FCCB) buyback deadline specified by the Reserve Bank of India.

The company this month cancelled $25 million of the FCCB maturity 2012 at a substantial discount to its accreted price. The second round buyback constituted 37.5% of the current outstanding of $66.6 million. In all, the company has reduced its US dollar Bond 2012 exposure from original $100 million to $41.60 million.

Vivek Nair, vice chairman and managing director, said that the company has concluded the second tranche by buying back the US dollar bonds which were available above the minimum discounts stipulated by the RBI.

“This will generate good savings in the redemption premium which would otherwise have been payable on maturity,” he said without diluting specific details on the savings being made with this exercise.

In March 2009, Hotel Leelaventure had concluded the first round of its FCCB buyback, mopping up 23.7% of its Eurobond maturing 2010 and 33.4% of its US$ Bond maturing 2012 at substantial discounts to its accreted prices.

In addition to the discount, Hotel Leelaventure would be benefited by the saving in the premium on the redemption of the bonds which would otherwise have been payable on maturity. The redemption premium payable on maturity on the Euro FCCBs is 25.5% whereas for the US$ Bonds, the redemption premium payable on maturity is 46.61%.

On the development side, Hotel Leela has expanded its presence in both the business and leisure segments with six hotels, following the commencement of Udaipur and Gurgaon properties earlier this year.

“The other projects under implementation include New Delhi at Chanakyapuri which will commence before Commonwealth Games and the hotel at Adyar beach in Chennai. This will take the room inventory to almost 2,250 rooms. This apart, hotel plots in Agra, Hyderabad and Pune will be taken up in due course,” Nair said.