Leelaventure shares jump to record on stake sale buzz

Company's shares closed 16.8% higher on BSE at Rs 21.20 compared to its previous close after hitting a high of Rs 21.75 during day

Shares of Hotel Leelaventure on Monday saw their biggest jump in about five years after news reports the company might sell controlling stakes in two properties to pare debt.

After hitting a high of Rs 21.75 during intra-day trade, shares of the city-based company closed at Rs 21.2 on BSE, up 16.8 per cent.

Reportedly, the company is in talks with the sovereign wealth funds of Abu Dhabi, Qatar and Malaysia to sell its Delhi and Chennai properties for Rs 1,850 crore. While the foreign investor might acquire 74 per cent interest in the two entities, Leelaventure will retain 26 per cent stake and continue to manage the five-star hotels.

DEBT PRESSURE?

• The company is in talks with the sovereign wealth funds of Abu Dhabi, Qatar and Malaysia to sell its Delhi and Chennai properties for Rs 1,850 crore
• The company has maintained it will sell some non-core assets such as land and commercial buildings to raise funds and reduce debt. As of last month, the company’s debt stood at about Rs 4,500 crore

Sources said a deal in this regard was yet to be struck.

“The company is in discussions with various investors and lenders for raising funds to meet debt-servicing obligations,” Hotel Leelaventure said in a filing with BSE.

The hotel company has maintained it will sell some non-core assets such as land and commercial buildings to raise funds and reduce debt. As of last month, the company’s debt stood at about Rs 4,500 crore.

Three years ago, the Nair family-controlled company had sold its luxury beach hotel in Kovalam to industrialist Ravi Pillai for Rs 500 crore. Two years ago, it had sold an information technology park building in Chennai to Reliance Industries.

However, plans of further divestment in other properties haven’t fructified because of issues related to pricing. “The valuation they are seeking is way more than Rs 1,000 crore for the Delhi property alone. This makes it very economically unviable for anybody who has any interest in it,” said a city-based hotel consultant.

The names of the sovereign wealth funds in talks with the company come just a month after reports stated US-based private equity company KKR & Co LP was in talks with Hotel Leelaventure for a loan of Rs 2,000 crore.

Subsequently, the Leelaventure board stated the bridge loan on offer didn’t meet its requirements. Therefore, it had authorised chairman and managing director Vivek Nair and co-chairman and managing director Dinesh Nair to further negotiate and finalise the terms and conditions of the loan. The company hasn’t disclosed the name of the company it is in discussions with.