Three bidders in close fight for Rajesh LifeSpaces’ hotel business, ET RealEstate

June 24, 2023

Ahmedabad-based hospitality and restaurant group Sankalp Recreation, Kolkata’s Shri Ram Multicom and Rare Asset Reconstruction Co are the bidders remaining in the race to take over the now-defunct Mumbai-based hotel property of real estate company Rajesh LifeSpaces, after 13 rounds of bidding.

The three bidders have offered different plans which will now be evaluated by Resurgent Resolution Professionals, the valuer appointed by banks. Depending on the valuer’s report, lenders will put the best plan to vote based on the net present value.

“All three bids are structured differently and lenders are now waiting for a report from Resurgent to decide which one can be designated as the preferred bid. The bidding has been strong and above expectations and now much higher than the base price of ₹305 crore set by creditors,” said a person aware of the process.

Sankalp Recreation has offered the highest amount of ₹533 crore, but most of the payment is deferred. It has offered ₹30 crore upfront, another ₹20 crore within 30 days and the remaining ₹483 crore in 300 days.

Shri Ram Multicom’s proposal is for ₹474 crore, payable over 90 days. Rare ARC has offered ₹461 crore upfront with another ₹31 crore in equity in the company. The equity offered is about 5% of the total ₹621 crore debt owed to lenders. “Because of the different payment schedules offered by the bidders, banks are waiting for the report of the valuer to make the right decision. But one thing is for sure, that the bids are much higher than the base price set,” the person said.

Lenders had called for an online challenger bid auction this month after multiple bidders evinced interest in the assets. A challenger bid is one in which a bidder matches or exceeds the top bid in every round till there is no one to challenge the highest bid.

DMart promoter Radhakishan Damani’s investment vehicle Bright Star Investments was also among six initial suitors but did not pursue after the early rounds.

Rajesh Business & Leisure Hotels had tied up with Singapore-based GHM Hotel to operate a 316-room five-star hotel under the ‘The Chedi’ brand at Kanjurmarg near Mumbai’s Powai locality. The company could not complete the project due to a liquidity crunch. Rajesh Business has been marked as a non-performing asset on bank books since 2019. ICICI Bank has the largest exposure to the company at ₹331 crore, followed by Bank of Baroda (₹162 crore) and Union Bank of India (₹128 crore). Their exposure is in the form of external commercial borrowings and bank guarantees.

  • Published On Feb 21, 2023 at 09:12 AM IST

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