Following a meeting with its lenders today, Hotel Leela Venture is hopeful of an agreement on loan restructuring proposal.
The company has outstanding loans of Rs 4,300 crore borrowed from a consortium of 17 bankers led by Syndicate Bank. Since it could not service its loans from January, the company approached the corporate debt restructuring cell in February “to seek 10-year extension of tenure”.
Though the first round of meeting with the lenders held a few weeks ago was inconclusive, today's meeting (convened by one of the major lenders SBI) turned out to be “fruitful”, said Mr Venu Krishnan, Deputy Managing Director, Hotel Leela Venture Ltd.
According to norms, a debt restructure proposal gets admitted if it is approved by 60 per cent of the lenders having 75 per cent of the total exposure.
In this case, some major lenders of the consortium, including State Bank of India and Bank of Baroda have agreed to the company's proposal. However, there are other prominent banks such as Syndicate Bank, Indian Overseas Bank and Vijaya Bank who need to approve the proposal.
Syndicate Bank and Indian Overseas Bank, together have almost 40 per cent exposure. In the case of Syndicate Bank, the loan has become overdue. And, sources say the banks are now insisting the promoters to bring in equity capital for the debt restructuring to go ahead.
However, Mr Krishnan told Business Line that the next round of meeting is scheduled for April 27, “when we hope to get their concurrence too”.
For the quarter ended December 31, 2011, the hotel reported a net loss of Rs 99.7 crore against a net profit of Rs 22 crore in the corresponding quarter previously. The company's interest cost went up more than five times to Rs 111.6 crore from Rs 20 crore earlier.
In its bid to reduce its debt, the company is in the process of selling some of its properties.
It has recently received Bombay High Court's approval for the sale of its Kovalam property (for Rs 500 crore), which it acquired in 2005 for Rs 150 crore.