Theme park operator Adlabs Entertainment Ltd has agreed to sell a minority stake to a company controlled by the founder of financial services firm Centrum Capital Ltd as part of efforts to cut debt.
Adlabs will raise Rs 50 crore ($7.8 million) by making a preferential allotment of 69,15,629 shares at Rs 72.30 apiece to Shaan Agro and Realty Pvt. Ltd, it said in a stock-exchange disclosure on Friday. This translates to a 7.85% stake in the theme park operator.
Mumbai-based Shaan Agro was incorporated in 2008. It is wholly owned by Businessmatch Services (India) Pvt. Ltd, a promoter group firm of Centrum Capital. Centrum Group’s founder, Chandir Gidwani, holds a 75.4% stake in Businessmatch Services.
Adlabs finance chief Mayuresh Kore told VCCircle that the company is hiving off non-core assets to reduce debt. This includes Adlabs agreeing to sell 170 acres of land to Shaan Agro, Kore said via email. Shaan Agro will take over Adlabs' debt of Rs 150 crore for the land deal.
Adlabs has also agreed to sell its 287-room hotel Novotel Imagica to Bright Star Investments Pvt. Ltd for Rs 212.5 crore in cash. Brightstar is promoted by Radhakishan Damani, the founder of supermarket chain D-Mart.
The hotel is located close to the Imagica theme park at Khopoli in the Raigad district of Maharashtra. The hotel has 116 operational rooms. The remaining rooms are likely to be operational during the current financial year, Adlabs’ annual report states.
Earlier this year, Manmohan Shetty-promoted Adlabs had raised around Rs 23.7 crore from media firm Bennett, Coleman and Co Ltd (BCCL) by issuing preferential shares and convertible warrants.
As on September 2017, BCCL held a 1.54% stake in Adlabs. The other major investors include private equity firm ICICI Venture Funds Management Company (12.86%) and Jacob Ballas India Fund (3.34%).
Manmohan Shetty and his family own a 54.37% stake in the company.
Kore said the company is exploring options to raise additional funds for growth and reduce debt.
Earlier this week, The Economic Times had reported that Adlabs was in talks with private equity firms to raise about Rs 650 crore.
The company’s outstanding secured loan was Rs 1,003.47 crore as on 31 March 2017, according to its annual report.
“The company’s ability to deleverage itself through land monetisation, achieve higher footfalls at its theme park and water park, together with the early launch of the balance 171 rooms shall be crucial for improving its liquidity profile and timely servicing its debt obligations,” credit rating firm ICRA said in a July report on Adlabs.
Adlabs operates a theme park under the brand name Imagica, which is spread over 130 acres. The park began operations in November 2013.
The company’s revenue from operations was Rs 238.9 crore and net loss was Rs 118.2 crore in the year through March 2017.