Leelaventure defaults on payment to LIC

Cash-strapped Hotel Leelaventure on Thursday said it had defaulted on payment of quarterly interest of ~21.2 million to Life Insurance Corporation of India (LIC). Hotel Leelaventure, which currently has a debt of over ~36.62 billion, had issued secured redeemable non-convertible debentures (NCDs) on private placement basis, aggregating ~900 million to LIC in December 2008.

“The company has defaulted in payment of quarterly interest of ~21.2 million, which was due on September 19,” the hotel said in a regulatory filing.

The debt-laden five star hotel chain said its operating cash flows were not sufficient to service its term loans and NCDs and the funds of the company were escrowed with its lenders and were also monitored by the lenders. “The company is evaluating various options for a viable restructuring, including sale /monetisation of non-core assets, sale of hotels, equity infusion, and debt refinancing by investors, etc,” it said.

Hotel Leelaventure said the total interest outstanding as on date is ~138 million and principal redemption amount outstanding as on date is ~4.5 billion. Earlier this month, Hotel Leelaventure got its shareholders approval to sell company’s land in Pune to Leela Lace Holdings for ~1.30 billion.

JM Financial Asset Reconstruction Company (JMFARC), which now owns 75.2 per cent stake in Leela, has been weighing investor proposals, Vivek Nair, chairman and management director of Leelaventure told Business Standard in June, pointing out that conversion of debt into equity “is indeed important to pare overall debt to sustainable levels.” According to unconfirmed reports, Brookfield Asset Management, a Canada-based investor in real estate and infrastructure firm, is in advance stage of talks to buy into the hotel.

Leela had restructured its loans under the earlier Corporate Debt Restructuring (CDR) mechanism, with January 1, 2012, as the cut-off date. One of the conditions of that package was debt would be brought down by ~20.3 billion by selling the Delhi hotel by 2014 March end. The company said a continuing recession in the segment had blocked this. As a result, the lenders on June 28, 2014, declared the CDR mechanism had failed. Following which, 14 lenders with a combined exposure of 95.6 per cent of the CDR debt had assigned their dues to JMFARC.

Shares of Leelaventure closed at ~16.25 on Wednesday, against ~16.50 the previous day on the BSE.