UK's Carnival Group offers 850 crore to buy Leela Chennai.

Debt-strapped Hotel Leela Venture has received a solitary bid for its Chennai hotel from The Carnival Group of the UK. The transaction has entered a crucial stage, and now hinges on how big a haircut can the Leela promoters and the lender consortium take as the bid value at Rs. 850 crore is lower than promoter expectations of at least Rs. 1,000 crore.

Leela Chennai and Leela Delhi are on the block to raise funds to pare the group's debt. The Chennai hotel is a 326-key sea-facing property in MRC Nagar in South Chennai.

The Leela chain, in which ITC Hotels holds a 12% stake, has been in the red for the past nine quarters. Its debt has risen sharply to around Rs. 5,000 crore from less than Rs. 1,000 crore a few years ago, forcing the company to sell some assets. Rapid expansion largely driven by borrowings forced the hospitality chain into Corporate Debt Restructuring (CDR) cell in 2012. Now, with JM Financial Asset Reconstruction Company buying nearly Rs. 3,850-crore debt, Leela walked out of CDR and is negotiating to sell the Chennai and New Delhi properties.

'We do not respond to market speculation and would ourselves report any such development after the board and the stock exchange have been notified,' a Leela spokesperson said.

The Nairs of Leela and The Carnival Group already have a working relationship. Carnival purchased Leela Group's IT Park in Kochi for Rs. 280 crore a few weeks ago.


TIMES OF INDIA