Leela Place put up for sale!

Debt forces group to sell its Chennai venture; Transaction estimated at Rs 700 cr

Luxury hotel chain Leela Palaces, Hotels and Resorts said it is in talks with buyers for a possible sell out of its Chennai property. The debt ridden hospitality chain said that no definitive agreement has been signed with anyone in particular for the proposed sale. ‘We are in discussions to sell the Leela Palace Chennai, but no binding agreement has been signed with any party, as on date,’ it said in a BSE filing.

Founded in the year 1986, the group founder CP Krishnan Nair, sold its Goa property for Rs 725 crore in 2015. The debt of the company still stood over Rs 5,000 crore and now the Mumbai based company had put two of its prime properties in Delhi and Chennai on the block way back in 2014, but failed to find suitors citing high valuation.

Earlier in 2011, the firm had sold its luxury hotel Leela Kovalam in Kerala for Rs 500 crore and an IT Park in Chennai to Reliance Industries for Rs 170 crore in 2013. Recently, it received a nod from their shareholders to sell the properties in Chennai and Delhi, to cut its debt. Reports say that American private equity fund Marigold Capital and Investments is likely to buy the Chennai venture, which has a capacity of 326 guest rooms and the proposed transaction is said to be around Rs 700 crore.

It is said that, Marigold Capital and Investments specialises in acquiring debt ridden hotels and commercial real estate properties and turning them into profitable businesses.


Light model

To pare debt, the company’s board had decided to sell its core and non core assets and switch to an asset light model. And the model seems to have paid off with the company back in black the previous financial year. It registered a net profit of Rs 13.42 crore for the quarter ended March 2017 as against a net loss of Rs 228.87 crore during the same period a year before, while net sales rose 2.3 per cent to Rs 198.35 crore in Q4, March 2017.

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