The lenders of Hotel Leelaventure, with an exposure of 95.6% of CDR (corporate debt restructuring), had sold their loans to JM Financial ARC.
The loss-making Hotel Leelaventure on Monday said it planned to issue up to 125 crore shares to JM Financial Asset Reconstruction Company. The shares would be issued on a preferential basis toward conversion of part of debt into equity, the company said in an exchange filing. Asset Reconstruction Companies (ARCs) are allowed to convert debt into equity and hold up to 26% equity in a company. In November 2017, the Reserve Bank of India (RBI) had allowed those ARCs with net-owned funds of more than Rs 100 crore to hold even a bigger share of the equity.
The lenders of Hotel Leelaventure, with an exposure of 95.6% of CDR (corporate debt restructuring), had sold their loans to JM Financial ARC. The total loans that were restructured under CDR were about Rs 4,000 crore. One lender with an exposure of about 1% of the CDR debt had assigned its debt to Phoenix ARC on June 30, 2014, according to a company filing.
Shares of Hotel Leelaventure closed at Rs 17.40 on the Bombay Stock Exchange on Monday. At this price, the preferential issue to JM Financial ARC would amount to Rs 2,175 crore. However, it is not clear at what price the conversion is taking place. As per Bloomberg, the total debt of Hotel Leelaventure has come down from Rs 3,954.15 crore at the end of FY17 to Rs 3,192.69 crore as on March 2018.
The company had earlier stated that it has been evaluating various options for a viable restructuring including sale or monetisation of non-core assets of hotel, equity infusion, and debt refinancing by investors etc.
“The company expects the restructuring to include certain waiver/ concessions in interest and repayment terms and pending approval of the same, has classified the debt as non-current liability in the balance sheet and has not provided for the interest as per rates notified by the ARCs,” it said.
Hotel Leelaventure posted a loss of Rs 15.80 crore during Q4FY18 on a standlone basis against a profit of Rs 52.14 crore in Q4FY17. The loss was mainly on account of an exceptional item worth Rs 32.94 crore. According to the company, the exceptional items for the quarter and year-ended represent net income from joint development of property amounting to rs 18.93 crore and impairment of capital work in progress and leasehold rights amounting to Rs 51.87 crore.
The company had clarified in its filing that if interest provision was made in accordance with the intimation received from the ARCs, the finance cost and the loss for the year would have been higher by Rs 788.73 crore and the interest liablity till March 31, 2018, would have been higher by Rs 3,031.45 crore.