Deal for Amanresorts Stalls, PEs Jump into Mix

Mount RInjani
Mount RInjani // Photo by Amthinkin/iStock/Getty Images Plus/Getty Images

DLF's plan to sell its Amanresorts chain to original founder Adrian Zecha has reportedly fallen through, and now the Indian real estate firm is looking for new suitors, having already been in talks with private equity funds and hotel companies, including Blackstone Group and Carlyle Group.

DLF has ended its exclusivity contract to sell luxury hotel chain to Zecha. Last December, DLF had announced the sale of the luxury chain, with resorts concentrated in Asia, but also two in the U.S., for somewhere in the neighborhood of $300 million to Zecha, as the company looked to drastically pare its debt. 

The original deadline of the deal was to be February 2013, which was subsequently extended to June 30. However, Zecha reportedly was not able to close the deal.  

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Now, the company is looking elsewhere. But finding a buyer may not be easy, First Post writes. A slowing economy and tighter liquidity situation are likely to pull down the price, putting a question mark over the Indian company’s ability to meet its debt reduction target, First Post wrote. 

"High leverage and mounting interest costs combined with tough macro, slowing demand, and the possibility of tighter liquidity pose significant downside risks to DLF," Citigroup said in a note as reported by First Post. The investment bank downgraded DLF to sell from neutral and said DLF would need a "rapid" resolution to its debt burden to preserve equity value over the medium term.

The sale Amanresorts is crucial to this debt reduction. According to a report in the Business Standard, DLF now has a debt of around Rs 20,000 crore. 

 

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