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NEW DELHI|MUMBAI: Canadian private equity major Brookfield Asset Management has finalised the terms and conditions to acquire Hotel Leelaventure with lender JM FinancialNSE -0.07 % for around Rs 4,500 crore, and the deal is likely to be announced in the next few days, two persons familiar with the development said.
“Leelaventure has communicated to their senior management that a deal with Brookfield has been finalised,” said one of the persons mentioned above. Brookfield is looking to pick up the majority of JM Financial Asset Reconstruction Company’s (JMFARC) debt. With a hotels portfolio spanning across Delhi, Chennai, Udaipur, Gurugram and Bengaluru, the chain’s debt exceeds Rs 3,000 crore. It could not be ascertained if Leela’s Mumbai property, which was stuck in a legal dispute with the Airports Authority of India (AAI), will be a part of the deal.
Leelaventure did not respond to an email seeking comments till going to press, while Brookfield declined to comment. In October last year, the Mumbai High Court refused to interfere in Leelaventure’s plea on eviction proceedings initiated against it by AAI. AAI had allotted the firm around 29,000 square meters of land behind Leela Mumbai for putting up a 391-room hotel through various pacts in the 1980s. In February 2017, AAI terminated the lease and initiated proceedings to take back the property over alleged defaults on payments and violation of agreements.
ET was the first to report on October 9 that talks between Brookfield and JMFARC were moving to an advanced stage and that JMFARC was keen to retain about 10% of the debt-hit hospitality company in its discussions with Brookfield Asset Management.
People familiar with the matter said Brookfield, a long-term investor known for turning around businesses, will retain the Leela brand.
Earlier, a consortium of investors including Blackrock, SSG Capital and RB Capital had also been in the fray for acquiring the hotel chain.
In 2014, Leela’s lenders with exposure of 95.6% of the debt had transferred the loans to JMFARC. One lender, which accounted for about 1% of the debt, assigned that to Phoenix ARC.
In June last year, Hotel Leelaventure’s board approved the enabling provision to issue up to 125 crore equity shares in one or more tranches to JMFARC, which currently holds most of its debt. The potential share issue could have hiked the ARC’s stake in Leelaventure to 75% from the current 26% but the proposal was not approved during the company’s annual general meeting held on August 20.