Private equity giant Blackstone Group Inc. has received court approval to acquire a debt-laden Trident hotel in Hyderabad for Rs 584 crore ($81.7 million), sealing in its first deal in India under the bankruptcy law.
The approval from the National Company Law Tribunal came last week, more than a year after the hotel’s creditors cleared Blackstone’s offer, the court order shows.
Blackstone offered to pump in Rs 384 crore to clear the dues of the workmen and creditors of Golden Jubilee Hotels Pvt. Ltd, which owns the property. The hotel, however, is managed by EIH Ltd, the operator of Oberoi and Trident hotel chains.
The PE firm has also committed an additional Rs 180 crore towards capital expenditure, the order shows.
Blackstone’s offer means the creditors will get back just about 37% of the amount they had claimed. As on June 2018, Golden Jubilee owed about Rs 950 crore to its financial creditors and about Rs 20 crore towards other creditors.
However, the offer is higher than the hotel’s liquidation value of Rs 448-458 crore.
Golden Jubilee’s creditors had approved Blackstone’s resolution plan by a vote share of 68.26% on December 21, 2018. However, legal challenges by the company’s promoters and operational creditors delayed the approval.
The hotel was declared a non-performing asset in December 2015 after defaulting on loans to nine banks due to project delays. It was taken to the bankruptcy court by lead lender Bank of Baroda in February 2018.
Apart from Blackstone, Bengaluru-based developer Sattva Group was also in the race to buy the property.
Golden Jubilee Hotels is 84% owned by Core Hotels and 16% by EIH. Core Hotels had offered to pay Rs 430 crore in a one-time settlement plan. The tribunal, however, dismissed Core Hotels’ petition. The bench of judicial member K Anantha Padmanabha Swamy and technical member Binod Kumar Sinha also dismissed a few other petitions by operational creditors.
EIH, which managed the property, had opposed a condition stipulated in Blackstone’s resolution plan to exclude it as the hotel operator. It had argued that it – as a third-party operator – was neither a promoter of Golden Jubilee Hotels nor was in control of management.
The tribunal, however, dismissed EIH’s petition. It said that EIH owned a 16% stake in Golden Jubilee and so could not be treated differently from Core Hotels.
However, the bankruptcy court left it to the discretion of Blackstone to consider EIH as a potential hotel operator on the condition that EIH would only be an operator and not interfere with the management and any decision-making process in the course of its business.