The luxury chain, operating under the Leela brand, sold its second property, at Goa, for Rs 725 crore last year. The sale came less than four years after selling its first hotel at Kovalam for Rs 500 crore.
Now it wants approval to begin the sale process for The Leela Palace, Chennai and/or The Leela Palace, New Delhi. It is also looking for shareholders to approve plans to "increase limits for making investments give loans, guarantees and provide securities beyond the prescribed limits” to up to Rs 1,000 crore from the present Rs 500 crore, the company said in a BSE filing.
"The company has been seeking a viable restructuring package from its lenders, but the lenders have advised that the debt level of the company to be reduced," the company said in the filing. "Pursuant thereto, the board at its meeting held on August 1, 2016 have subject to approval from its shareholders...approved the commencement of the process of sale and transfer of the undertaking of the company pertaining exclusively to the Leela Palace, Chennai and The Leela Palace, New Delhi."
It further said that JM Financial Institutional Securities has been given the exclusive mandate as financial advisor for the sale of both hotels.
The Chennai hotel only began operating three years ago.
As of the end of the most recent fiscal year, Leela's debt is estimated to have been Rs 4,500 crore, and the company has not seen any profits since 2011-12. As such, the company is “presently adopting an asset-light strategy” and focusing on management opportunities.
Currently, Leela has four managed properties (Goa, Kovalam, Gurgaon and Delhi), and is nearly divided in half between owned and managed rooms.