In what appears to be a move to lower its huge debt burden, realty company DLF Ltd announced on Wednesday (December 19) that it was selling its luxury hotel chain Amanresorts back to its founder Adrian Zecha for around $300 million (Rs 1,643 crore).
DLF has been looking to sell this "non-core" asset for the past three years to pare its debt, which amounted to about Rs 21,220 crore on November 12. The company is looking to reduce that amount to Rs 18,500 crore by the end of the current financial year.
The deal excludes the prime Aman New Delhi property.
In 2007, DLF had bought a 97 per cent stake in Silverlink Resorts, the holding company of Amanresorts, for $400 million ($250 million equity and $150 million debt) from Zecha, who is now buying the hotel chain back.
DLF is selling the asset for just a little over its purchase price after factoring in decline in the value of the rupee. "The rupee's depreciation has helped DLF, which has been trying to sell Amanresorts for the last three years," confirms Tejas Sheth, analyst at Emkay Global Financial Services. In 2007, when it bought the hotel chain, the rupee was trading at around Rs 39.5 to the dollar - a purchase consideration of around Rs 1,580 crore.
When the company first put this asset on the block in 2010, it was expecting offers of around $400 million. Later, the price was brought down to $350 million.
Analysts say that even though it appears to be a distress sale, it is a positive step for DLF.
Silverlink Resorts, which owns and manages 25 luxury resorts and hotels worldwide, is a loss-making entity. In the quarter ended September, it reported a net loss (after tax) of Rs 27.72 crore. In the quarter before that, the losses were at Rs 2.29 crore.
DLF has not been involved in any distress sale until now. In fact, the company made a killing in July, when it sold 17.5 acres of land in Mumbai to Lodha Developers for Rs 2,727 crore. The company had bought that land from the National Textile Corporation in 2005 for Rs 702.2 crore.