Brookfield Asset Management is in talks with lender JM Financial Asset Reconstruction Company for acquiring a stake in debt-ridden hospitality chain Hotel Leelaventure, people familiar with the development said.
“Three to four investors are in the fray. Brookfield is one of them. Nothing has been finalised yet,” Dinesh Nair, managing director at Hotel Leelaventure told ET.
A consortium of BlackRock, SSG Capital and RB Capital is also in the fray, and their proposal is also pending with JM Financial ARC (JMFARC), which controls majority of the debt in Leelaventure, Nair said.
The size of a potential deal could not be ascertained.
JMFARC did not respond to an email seeking comments as of press time Sunday.
In June this year, Hotel Leelaventure’s board had approved an enabling provision to issue up to 125 crore equity shares in one or more tranches to JM Financial ARC, which currently holds most of its debt.
The potential share issue could have increased ARC’s stake in Leelaventure to 75% from the current 26%, but the matter could not go through in the company’s annual general meeting held on August 20. “It was put in the meeting, but there was objection from one of the lenders so it was not eventually passed,” Nair said.
Leelaventure, which has hotels in Delhi, Mumbai, Chennai, Gurugram and Bengaluru, currently has a debt of over Rs 3,000 crore.
In 2014, its lenders with an exposure of 95.6% of the debt, had transferred the loans to JM Financial Asset Reconstruction Company. One lender, which accounted for about 1% of the debt, assigned that to Phoenix ARC.
Hotel Leelaventure’s standalone net loss widened to Rs 66.7 crore for the quarter ended June from Rs 23.6 crore a year earlier due to a rise in expenses. It posted standalone total income of Rs 159.2 crore against Rs 152.9 crore a year earlier.
While other entities have also been in talks with JMFARC to assess Leela’s debt situation, Brookfield’s entry could be a game changer.
Brookfield is traditionally known to be a long term, patient and contrarian investor that looks for opportunities during slowdown in any sector or in an adverse situation to turn it around.
Brookfield declined to comment on the story.
“Brookfield has been looking out for hospitality assets in the market,” a person familiar with the developments told ET.
Brookfield made its first investment in India in 2013 with the acquisition of Unitech Corporate Parks (UCP) and has so far invested
around $5 billion in the country.
Following the acquisition of the then under-construction 16-million-sq-ft portfolio of UCP, Brookfield had to build the remaining 50% as
the erstwhile developer Unitech could not take it ahead.