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Viceroy Hotels Ltd has decided to sell its Chennai hotel project. It has signed an agreement with the Chennai-based Mahal Hotels to sell the project in MRC Nagar. This hotel was to be managed by global chain JW Marriott.
This marquee project, which the Hyderabad-based hospitality chain, had taken up with an outlay of about Rs 650 crore, was under advanced stage of implementation. The company has been seeking to restructure its business operations bringing down debt on its balance sheet. It had initiated a series of measures, including slump sale of Bangalore and Chennai properties.
“We have finalised the deal with Mahal Hotels and decided to exit the Chennai project. This move will help us reduce the debt by Rs 400 crore. Then we will have a light balance sheet with a debt of about Rs 200 crore,” Mr P. Prabhakar Reddy, Chairman and Managing Director, Viceroy Hotels, said.
Speaking to Business Line , Mr Reddy said, “This move would help the company focus on the existing projects and thereafter enable us to take up new projects. The debt had become a major issue. Therefore, we decided to exit the Chennai project and focus on projects we currently manage while executing the 21-storey Bangalore Renaissance venture.”
“Likewise, we had brought in investments by JP Morgan in the Bangalore project. This project is being co-developed by Viceroy. The company promoters hold about 32 per cent stake. We had pledged some shares with lenders and recently resumed them after retiring the existing debt,” he explained.
Rakesh Jhunjhunwala picks up stake
Asked about investor Mr Rakesh Jhunjhunwala picking up stake in the company, Mr Reddy said that possibly he sees value in the company business after we have brought down the overall debt.
“If you look at the company stock, it has been going up lately.” He has acquired additional stake in the company.
Mr Jhunjhunwala has increased his stake in the hospitality chain taking it past the 15 per cent mark.
The Viceroy Hotels scrip has seen steady increase in the past few days hitting the upper circuit. The company scrip gained 4.95 per cent in today's trade quoting at Rs 22.25.
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