Leela Group to sell Kovalam property for Rs500 crore to ease debts

The Leela Group is set to sell its property, Leela Resorts Kovalam in Kerala, to a non-resident Indian Ravi Pillai for Rs500 crore to ease its debt burden, The Economic Times reported quoting C P Krishnan Nair.

Hotel Leelaventure, a listed company, had accumulated debt of Rs3,830 crore at the end of FY11 owing to capital expenditure of over Rs4,000 crore, which is currently underway.

Kovalam is a famous beach on the outskirts of Thiruvananthapuram, the capital of Kerala.

The deal, however, will not result in Leela exiting the property completely as the company will enter into a management contract with Pillai to manage the property for 30 years.

Pillai confirmed the deal to the newspaper, but declined to provide details.

The trigger for the sale of the property, which was originally developed by state-run Indian Tourism Development Corporation is to reduce debt.