New Delhi, Dec. 19: DLF, the country's biggest real estate developer, will sell its luxury hotel and resort chain Amanresorts back to founder Adrian Zecha for around Rs 1,650 crore ($300 million) to trim its net debt.
The deal, which excludes the flagship Aman Lodhi Hotel in Delhi, is expected by February.
"DLF Global Hospitality Ltd (DGHL), the 100 per cent step-down subsidiary of DLF, and Adrian Zecha, the founder and chairman of the Amanresorts group of luxury resorts, are pleased to announce the signing of a definitive agreement to effect Zecha's management buy-out of DGHL's 100 per cent shareholding in Silverlink Resorts Ltd, the holding company for Amanresorts," the realty major said in a statement.
"The value of the buyout is at an enterprise value of approximately $300 million and it does not include the Aman New Delhi property (Lodhi Hotel), which shall be retained by DLF Ltd."
Amanresorts, on the block for the last two years, had bidders from across the globe, including China-based conglomerate HNA. Other contenders included Malaysian sovereign wealth fund Khazanah, fashion group Louis Vuitton and Kingdom Holdings, which owns the five-star hotel chain Four Seasons, who were willing to pay Rs 1,800 crore to Rs 2,000 crore, said investment bankers.
"There have been other suitors for this transaction but we felt that given what Adrian Zencha proposed, the management was in best capacity to take this brand forward," Saurabh Chawla, executive director of DLF, told news channels.
He clarified that the money from the deal would be largely utilised to trim DLF's debts.
Chawla added that the company was focused on completing the sale of its wind energy business, and added that the deal was likely to happen by March.
K.P. Singh owned DLF, which had a debt of around Rs 21,220 crore on its books at the end of October, is in talks to sell its wind power business, which is expected to fetch another Rs 1,000 crore.
The company aims to reduce its debt to Rs 18,500 crore by the end of this financial year.
Aman Resorts has 25 assets across Thailand, Bhutan, Cambodia, China, France, Indonesia, Laos, Montenegro, Morocco, the Philippines, Sri Lanka, the Turks and Caicos Islands and the US. It has three properties in India. After the stake sale, DLF will retain the Delhi Aman property. The other two Indian assets are in Rajasthan ' the Aman-i-Khas and Amanbagh ' which would change hands.
This is the second time that Zecha, who is now 80 years old, is returning to Amanresorts. Zecha, the founder of the luxury chain, earlier worked as a journalist and was the founder of the now-defunct Asia Magazine.
Zecha formed Amanresorts in 1986 and was forced to leave in 1999 because of a dispute between shareholders Clement Veturi and Colony Capital. He came back in 2000 before selling out to DLF in 2007.
DLF had bought a 97 per cent stake in the company for a valuation of $400 million (Rs 2,120 crore at the current rupee value) in 2007, during the realty boom. It subsequently raised its stake to 100 per cent. Since the downturn in the sector, DLF has been looking for a buyer for this property.
Analysts said the agreement to sell Singapore-based chain represented a milestone in DLF's efforts to divest non-core assets such as hotels, land and industrial plots, partly to retire debt and to raise funds for its main business of developing property. The company had said last year that it aimed to raise up to Rs 10,000 crore by 2014 from the sale of such assets.
In August, DLF sold land in Mumbai for Rs 2,727 crore, and in June, it sold its entire stake in Adone Hotels and Hospitality Ltd for Rs 567 crore.
Domestic property developers are struggling with lower sales and a decline in profit as high interest costs and a slowing economy continue to hurt demand for new homes.
Amanresorts opened its first property at Phuket in Thailand in 1988. Rates at the retreats of Amanresorts exceed $800 a night and go up to more than $2,200 a night.
Shares of DLF gained as much as 2.2 per cent on news of the sale. The realty major has reported a 62.81 per cent fall in its consolidated net profit at Rs 138.51 crore for the quarter ended September.
Sales during the second quarter fell 19.46 per cent to Rs 2,039.54 crore from Rs 2,532.41 crore a year ago.