New Delhi, April 4 (IANS) In what is being seen as a bizarre decision, the board of Hotel Leelaventure Ltd (HLVL) at its meeting on March 18 while selling the hotel business, together with all assets and liabilities of the hotels located at Bangalore, Chennai, Delhi and Udaipur on a slump sale basis, also forked out Rs 150 crore each to the erstwhile promoters – Vivek and Dinesh Nair.
Further the sale to Brookfield also included 100 per cent shareholding of the company in Leela Palaces and Resorts Ltd which owns property and holds licences for the development of a hotel in Agra. All other management contracts currently in operation along with employees have been transferred to Brookfield.
HLVL has a portfolio of nine properties in India. In effect, it means the Nairs have exited the company lock, stock and barrel for a consideration of Rs 300 crore.
In its filing to the BSE and NSE, the sale transaction included all the intellectual property, if any owned by the promoters and their affiliates (other than HLVL) used in, held for use in, or related to the above for a consideration of Rs 150 crore.
The filing also states that execution of an agreement between Brookfield and certain members of the promoter group or their affiliates, for the provision of business expansion services to Brookfield as may be mutually agreed, for a consideration of Rs 150 crore.
Curiously, as part of the proposed transaction, voting and exclusivity agreements with the promoters have also been executed, where relevant members of the promoter group have provided their express consent to vote in favour of shareholders’ resolutions for the the aforementioned transactions, in such a manner so as to give effect to this transaction, and prescribing the manner of dealing with competing offers in relation to the transaction.
Is the surmise that the Rs 300 crore given to the promoters part of this exercise? The promoters who own the Leela brand will now be transferring it to Brookfield for all the hospitality business. That means the Leela IPR has been handed over for Rs 300 crore.
As part of the transaction, execution of the licence agreement and centralised services agreement with the company in connection with the Leela situated at Mumbai and the leasehold rights with respect to land forming part of the larger land measuring 24,404 sq metres situated at Old Airport Road, Bangalore by way of a fresh lease from Leela Lace Holdings Pvt Ltd and cancellation of the existing lease with the company.
The filing also says that the proposed transaction is subject to the fulfilment of certain covenants, including the obtaining of the approval of the shareholders of the company who have been given the short shrift in this deal, as well as the approval of the lenders of the company.
The total consideration payable to the company is an amount of Rs 3,950 crore subject to adjustments on account of net working capital plus the applicable transaction cost. It goes on to say the company will continue to operate the hotel in Mumbai and own certain land in Hyderabad and the joint development project of residential apartments with Prestige Developers in Bangalore. Brookfield will have the right of refusal over the company’s hotel in Mumbai, as part of the transaction.