Refurbished Sea Rock Hotel to open doors in 2013

Written by Shweta Bhanot | Mumbai | Updated: Jan 30 2010, 04:54am hrs
After remaining shut for almost two decades, 1993 bomb blast-hit Sea Rock Hotel in Mumbai will throw open its doors once again to guests in 2013. The new owner of the property, Indian Hotels Company Ltd, a Tata group company, that runs the Taj Hotels Resorts and Palaces chain of hotels, says the property would be redeveloped to house a convention centre, a big shopping arcade and large suites. Construction, would begin this calendar year. The property should be re-developed and opened in three years, said Anil P Goel, executive director finance, IHCL. Meanwhile, the company said the heritage wing of the Taj Mahal Palace & Tower hotel in Mumbai, scheduled to open in phases, will be opened completely in one go on Labour Day May 1 this year.

In a bid to hasten the re-development of Sea Rock and at the same time not leverage the IHCL balance sheet too much, the company has carved out its investment in ELEL Hotels and Investments Ltd. ELEL, which owned the Sea Rock hotel in Mumbai, will be floated into a special purpose vehicle (SPV).

IHCL will now hold 20% in the SPV while the remaining 80% will be held by five to six companies including a few Tata group companies. IHCL had acquired a majority stake (85%) in ELEL for Rs 680 crore in June 2009.

We will continue to fund it. This move will give us flexibility in re-developing Sea Rock and will bring in liquidity into the system of IHCL, said Goel. He added the SPV is infusing liquidity of Rs 750 crore raised through zero coupon bonds in the company and going ahead, IHCL can infuse capital or the SPV can raise money on its own.

The company had floated rights issue of Rs 2,400 crore in May 2008. We raised Rs 600 crore and another Rs 900 crore were left and funds were needed for expansion. We then went ahead with Sea Rock acquisition, which leveraged our accounts, Goel said.

He added, There is a need to ensure liquidity in the system and we are looking to convert the short-term debt into long-term one.

IHCL has raised Rs 400 crore unsecured debt at an average yield of 9.5% per annum and said it will be raising Rs 300 crore secured debt in March 2010 at a similar yield. The funds raised will be used in repaying outstanding debt of $95 million in US assets, $90 million debt in Samsara Properties and the balance cash will be used for funding the on-going green-field expansion projects. As on March 31, 2010, the company will have consolidated net debt of Rs 4,000 crore on its account, which Goel said has been brought down by Rs 650 crore.

Talking on the option to re-purchase the shares of ELEL at the end of 37 months or three years, Goel said the company has its options open and we will decide whether to do include it in IHCL or put it under our subsidiary company or partially own it.