Leela to sell 4 hotels and its Agra property to Brookfield for Rs3,950 cr

Debt-laden hospitality firm Hotel Leela Venture will sell four of its hotels and a property to Canada-based buy-out firm Brookfield Asset Management for Rs3,950 crore.

The deal covers four hotels, in Bengaluru, Chennai, Delhi and Udaipur, and its property in Agra on a slump sale basis.
The deal gives Brookfield 100 per cent shareholding in its Agra property, Leela Palaces and Resorts Ltd, which holds the licence to develop a hotel. 
Leela will continue to operate a hotel in Mumbai and own some land in Hyderabad. It will also continue to jointly develop residential apartments with Prestige Developers in Bengaluru.
However, Brookfield will have the first right of refusal should Leela Venture opts to sell its Mumbai hotel as well. 
The sale accounts for nearly 80 per cent of Leela’s revenues and 88 per cent of the company’s net worth.
The proceeds of the deal, which will also see the company's owners transfer the 'Leela' brand to Brookfield for all hospitality businesses, will be used to repay existing lenders of the company, Hotel Leela Venture said in a statement here.
In a communication to the BSE, the hotel chain company said the proceeds of the sale will be used to repay its lenders. “After completion of the aforesaid transaction, all borrowings of the company from all banks and financial institutions would stand repaid,” said a statement.
Under the agreement, Brookfield will pay Rs150 crore for all the intellectual properties of Leela. The deal will also include the sale of the ‘Leela’ brand to Brookfield.
A licence and centralised services agreement will be signed for The Leela Hotel, Mumbai, along with leasehold rights being transferred in the name of Brookfield for 24,404 square metres of land on Old Airport Road, Bengaluru.
A new a joint venture agreement between Brookfield and the promoters of Leela will be signed to carry out development activities jointly in the future.
Ankur Gupta, managing director and head-India Real Estate, Brookfield, said: “The Leela is one of the finest hospitality groups in India and over the years it has gained extraordinary recognition from some of the most prestigious authorities on travel and luxury in the world. We are excited with this opportunity and look forward to completing this transaction at the earliest, while ensuring that all operations remain unaffected.”
JM Financial Asset Reconstruction Co, which owns most of Leela’s debt, had recently filed an application with the Mumbai Bench of the National Company Law Tribunal (NCLT)
The application was filed under Section 7 of the Insolvency and Bankruptcy Code (IBC) after the company failed to arrive at a concrete plan to pay off its debt.
At the end of December 2018, Leela had a debt of Rs6,164 crore. The company’s losses widened to Rs89 crore in the nine months ended December 2018, against Rs7.42 crore in the same period a year ago.
The shareholding of the company will remain unaffected after the sale, Hotel Leela Venture said.