US private equity giant Blackstone Group obtained the approval of India’s bankruptcy court to acquire Trident Hotel, owned by Golden Jubilee Hotels and manged by East India Hotels (EIH) of Oberoi group, for around Rs 585 crore, months after lenders cleared its resolution plan.
This is the first deal by the global private equity giant under India’s Insolvency and Bankruptcy Code (IBC) to infuse foreign capital.
As a part of its resolution plan, Blackstone Group under its resolution plan has agreed to pump in Rs 384 crore up front to clear the dues of the workmen and creditors, apart from committing infusion of Rs 180 crore towards capital expenditure.
Interestingly, Trident Hotel – a 324-room five-star hotel property in Hyderabad’s IT corridor – shot into limelight after hosting Ivanka Trump during her participation in the Global Entrepreneurship Summit in November 2017.
The National Company Law Tribunal’s Hyderabad bench on Wednesday ordered the approval of the revised resolution plan of Blackstone Group submitted through its entity BREP Asia-II Indian Holdings Co. II (NQ) Pte Ltd.
Bengaluru-based realtor Sattva Group was also among the front-runners with Blackstone for the Hyderabad Trident property being sold under the watch of India’s dedicated bankruptcy mechanism.
The Tribunal on Wednesday dismissed the petitions of promoter Core Hotels – with majority stake of 84% in Golden Jubilee Hotels – to consider its one-time settlement plan and the petition of EIH, which owns 16% equity, to continue it as operations and management entity.
The Hyderabad bench of NCLT comprising judicial member K Anantha Padmanabha Swamy and technical member Binod Kumar Sinha also dismissed few other petitions by operational creditors who contested the differential payment and distribution amongst the creditors.
Golden Jubilee Hotels – owned by Core Hotels of Lakshminarayan Sharma and EIH of Oberoi Group, with 84% and 16% equity holdings respectively – was taken to the bankruptcy court by lead lender Bank of Baroda in February 2018. In all, the hotel owed around Rs 1,000 crore financial and operational creditors.
Opposing the condition stipulated in the resolution plan excluding it to continue as the hotel operator and to engage any global hotelier, EIH has submitted to the Tribunal that it – as a third party operator – is neither a promoter of Golden Jubilee Hotels nor was in control of management.
The Tribunal, while dismissing EIH’s petition, said “EIH being a promoter shareholder having 16% equity of the corporate debtor, cannot be treated differently from the other promoter Core Hotels having 84% of the equity shareholding in corporate debtor.”
However, the bankruptcy court left it to the discretion of the successful resolution applicant Blackstone Group to consider EIH as a potential hotel operator, “provided EIH will play its role purely and exclusively as an operator and does not indulge in or interfere with the management of the affairs of the corporate debtor and in any of the decision making process in the course of its business.”
Source: The Economic Times, February 14,2020