Viceroy Hotels to hive off Chennai project division

Viceroy Hotels (VHL) today said it is looking to hive off its Rs 560 crore Chennai project into a separate company to cut debt on its balance sheet.

"Hiving off of the Chennai project division will help reduce debt from the books of VHL. The company is building a luxury hotel property in Chennai, which has a total debt of around Rs 450 crore," VHL Company Secretary P Lenin Babu told PTI.

A meeting of the Board of Directors of the company will be held on March 26, 2011 to consider hiving off the Chennai Project Division, VHL said in a filing on the Bombay Stock Exchange.

Babu said the Chennai property will have a total of 387 rooms. It started construction started in 2005 at an initial cost of Rs 490 crore, which was later revised to Rs 560 crore.

Due to lack of funds the project got delayed in between and is likely to be operational in the next 2-3 years.

He said reduction in the debt of the parent company will enable VHL to raise fresh funds.

The company's shareholders have recently approved hiving-off of the 'Bangalore Project Division' for a consideration of Rs 205 crore.

"The project in Bangalore will take another one and a half years to get operational," Babu added.

VHL currently operates two hotel properties in Hyderabad under the Marriott and Courtyard brand names.

The company's total turnover for 2009-10 fiscal was Rs 56.65 crore. Shares of VHL closed today at Rs 33.85 per share on the Bombay Stock Exchange, up 0.74% from the previous close.