The Nairs-promoted HotelLeelaventure plans to sell 14.5% stake to a clutch of private equity funds to raise Rs 600 crore in order to bring down its debt of Rs 3,900 crore. An additional Rs 250 crore would be raised from the sale of the hospitality chain's land in Chennai.
The hospitality chain, which has seven properties in its portfolio, would sell 14.5% stake, just a shade less than the mandatory open offer limit of 15%. Rules mandate that if an acquirer purchases 15% stake in a company, it triggers an open offer for an additional 20% stake.
“Our shareholders have already approved the fund raising proposal. We are looking to raise Rs 600 crore through a preferential allotment in the next four months,” said Hotel Leelaventure's vice chairman and managing director, Vivek Nair. He declined to reveal the names of the private equity players that have shown an interest in the company.
In January 2010, the board of Hotel Leelaventure approved a proposal to raise funds to the extent of Rs 600 crore.
Shares of Leela on Friday ended at Rs 40 on the BSE, up 2.23% compared to Thursday's closing price. “The funds will be used to repay debt,” Nair said. The proposed share-sale would bring down Nair's stake in India's fifth largest hotel group by 4%. They hold about 55% in Hotel Leelaventure.
The company's three new properties in Udaipur, Chennai and Delhi have recently opened doors to guests and it expects to get Rs 700 crore when its operations stabilizes in two years.
Source: Times of India