During a recent BSE filing, Hotel Leela Venture announced that it plans to sell 4 of its properties to Brookfield Asset Management for 3,950 Crore INR. It has entered an agreement with the company to sell its properties in Delhi, Chennai, Bangalore, and Udaipur as a part of a slump sale. This transaction will not just be limited to the properties being sold. The hotel management assignments, as well as all employees at these specific properties, will also be a part of the deal. The transaction value, which is said to be at 3,950 Crore INR, does not include additional charges that are applicable. At the same time, the Leela brand will also be transferred to Brookfield Asset Management as a part of this deal.
According to the statement in the filing, all proceeds of this sale will end up going to lenders of the company so that all dues can be repaid. The statement also said “After completion of the aforesaid transaction, all borrowings of the company from all banks and financial institutions would stand repaid,”
Mr. Vivek Nair, the Chairman and MD of Hotel Leela Venture, commented on this development. He said, “The Leela is rated amongst the top hospitality brands in the world and I am confident that the brand will receive a boost and be further strengthened and continue to be known for its world-class services”.
Mr. Ankur Gupta, Head of India Real estate and MD of Brookfield Asset Management said “We are excited with this opportunity and look forward to completing this transaction at the earliest while ensuring that all operations remain unaffected. We expect the Leela hotels to continue to be market leaders,”.
As of now, Leela will still continue to operate their Mumbai property on their own. The Leela Group will also continue to own some land in Hyderabad. Furthermore, it will also continue its work on the development of residential projects in Bangalore along with Prestige developers. While Leela will still be running the Mumbai property, Brookfield Asset Management has the first right to refusal for this property, as per the deal that the two companies have negotiated.
This deal was facilitated with the help of JM Financial and their advisors, who worked with Leela and guided them in their decision making for this deal. The shares of Leela closed at 11.08 INR per scrip, which is an increase of 1.09% from the previous close. The market is clearly in favor of this deal.
image source: theleela.com