rare: Rare-Naman gets the vote for Rajesh Lifespaces’ hotel unit

Lenders to real estate developer Rajesh Lifespaces’ hospitality arm have unanimously voted for the Rare Asset Reconstruction Co and Naman Group consortium to take over the company’s defunct hotel business in Mumbai. Lenders have already submitted the plan to the National Company Law Tribunal (NCLT) for approval earlier this month, people familiar with the matter said.

The Rare-Naman Group consortium had offered ₹461 crore upfront in cash with another ₹31 crore in equity, making it the preferred bidder for lenders, ET reported in its February 27 edition.

“In a vote conducted earlier this month, all lenders voted in favour of the Rare resolution plan. Only Union Bank of India said it was not averse to the other two plans. So, there was no one who voted against the Rare-Naman plan,” said a person familiar with the process.

Rajesh Business & Leisure Hotels owes lenders led by ICICI Bank a total of ₹621 crore. It had tied up with Singapore-based GHM Hotel to operate a 316-room five-star hotel under the ‘The Chedi’ brand at Kanjurmarg in Mumbai. However, the company could not complete the project due to a liquidity crunch. The company has been marked as a non-performing asset (NPA) on bank books since 2019. The resolution plan envisages about a 74% recovery for lenders without taking into account the equity upside.

ICICI Bank has the largest exposure to the company with ₹331 crore, followed by Bank of Baroda (BoB) with ₹162 crore and Union Bank of India with ₹128 crore. The claims from banks are in the form of external commercial borrowings and bank guarantees.

Ahmedabad-based Sankalp Recreation and Kolkata’s Shri Ram Multicom were the other two bidders. Sankalp’s offer was the highest at ₹533 crore, but it had proposed a deferred payment, 300 days after the NCLT approval. Lenders were also not comfortable with Sankalp’s financial position.

“The amount under consideration was close to ₹500 crore, which is not small change. Though Sankalp showed some assets in the form of properties, they could not show cash with banks. Their payment was deferred, though they had later promised to pay within two months of NCLT order, banks chose the more surer bidder,” said the person cited above.Rare’s tie-up with Check-Inn, a part of the Mumbai-based Naman Group, which has a stake in Sofitel Hotels India, and the ₹480 crore in cash shown in their bank account along with future equity upside for lenders swung the vote in their favour.

The vote is a culmination of more than six months of lender efforts to find a buyer for the hotel. In November last year, the lenders had received some 26 expressions of interest from entities to take over the debt-laden hotel. Lenders will now wait for the NCLT approval to proceed with the deal.

Interest in the hotel has been strong because Mumbai’s Powai locality doesn’t have any five-star or mid-market hotels. Also, the rebound in leisure and business travel after the Covid outbreak has whetted the appetite of potential buyers.