Sky Gourmet Catering Private Ltd (SkyGourmet), a subsidiary of AIM-listed investment firm India Hospitality Corp, has entered into a secured loan agreement with Punjab National Bank for Rs 25 crore (approx $5.6 million).
The loan will mature in nine months following the initial drawdown date and is repayable in three equal instalments payable at the end of the seventh, eighth and ninth month from the date of drawdown and will bear interest at the base prime lending rate plus 1% per annum, payable monthly.
The funds obtained through the loan will be used to fund the working capital requirements of SkyGourmet. The initial drawdown is expected to commence this month.
Under the terms and conditions of the loan, PNB has required Indian Hospitality Corp CEO Ravi Deol besides COO of the firm Sandeep Vyas to provide personal guarantees for the loan. Given the requirement for the personal guarantee, the company has relaxed the terms of a conditional share issue proposed for the two top executives, former executives associated with Indian coffee chain Barista (now owned by Lavazza).
India Hospitality Corp. raised $103 million through an IPO and private placement in August 2006. Within a year of raising the funds it had struck multiple sector exposure.
It acquired SkyGourmet Catering Pvt. Ltd, a leading flight catering business in India. It also acquired Mars Restaurants Pvt. Ltd, one of the largest multi-brand restaurant chains in India, with a particular focus on western region of India. Mars operates in both the specialty and value-for-money segments.
The firm also built exposure in hospitality business with Gordon House Hotels as part of the Mars Group. The group currently has three properties but has plans to build and manage in excess of 25 by 2012 through both organic and inorganic growth.
In December 2007, Hayground Cove and Navis Capital jointly invested $28 million of additional capital in the firm, bringing their total invested capital to $56 million. Following this Hayground Cove and Navis own approximately 54% of India Hospitality Corp.