Hotel Leelaventure shares jump on Chennai building sale to RIL

Hotel Leelaventure shares on Tuesday jumped over 8 per cent, a day after the company sold its IT park building in Chennai to Reliance Industries (RIL). The move is expected to help the hospitality group reduce its debt of over Rs 4,000 crore.

"With reference to the earlier announcement dated November 2 regarding approval of the Board of Directors to sell the company's IT Park Building in Chennai, Hotel Leelaventure Ltd has now informed BSE that it has executed on February 18 an agreement for sale with RIL to sell the above said property for a consideration of Rs 170.17 crore," the company has said in a filing to the Bombay Stock Exchange.

Shares of Hotel Leela Venture was trading 8.76 per cent higher in afternoon trade at Rs 26.70 on the Bombay Stock Exchange. The shares were trading similarly on the National Stock Exchange, up 8.76 per cent at Rs 26.70 at the same time.

In November last year, Hotel Leela Venture's board had approved the sale of the company's commercial building in Chennai for a consideration of Rs 172 crore. The company had said the sale proceeds will be utilised for reduction of debt.

The company had a debt of about Rs 4,250 crore, as on January 1, 2012. In a separate filing to BSE, Hotel Leela Venture said it has also made efforts to raise further equity, but could not succeed due to the depressed equity market.

The company posted a net loss of Rs 99.65 crore for the third quarter ended December 31, 2011, compared to a net profit of Rs 22.04 crore in the same period last year due to high interest costs and increase in depreciation and staff related expenditure.

The company's interest outgo in the October-December 2012 quarter increased over five-fold to Rs 111.58 crore, as against Rs 20 crore in the third quarter of last financial year.

Hotel Leela has also sought approval from shareholders for the corporate debt restructuring (CDR) package for restructuring its debt.

Leela Group currently has eight hotels comprising 2,200 keys in its portfolio at Bangalore, Gurgaon, Mumbai, New Delhi, Chennai, Goa, Kovalam and Udaipur. Of the eight hotel properties, six are owned and two are management contracts. Leela is coming up with hotels at Jaipur, Agra and Ashtamudi (Kerala) and Bangalore.