Hotel Leelaventure Ltd has opened discussions with sovereign wealth funds of Abu Dhabi, Qatar and Malaysia to sell its prime properties in Delhi and Chennai for around Rs 1,850 crore to pare debt.

The firm, which owns, operates and manages hotels, palaces and resorts, is likely to hive-off the two properties into separate entities.

While the foreign investor may pick up 74 per cent interest in the hived-off entities, Leelaventure will retain 26 per cent stake and continue to manage the five-star hotels, sources said.

When it was first reported in February that Leelaventure is selling the two hotels, the company informed the stock exchanges: "In terms of Corporate Debt Restructuring (CDR) package being implemented, the company has to reduce its debts through sale of assets."

It had stated that the company was "in discussions with various investors" and it continues to "evaluate proposals".

As part of discussions with the cash-rich sovereign wealth funds of Abu Dhabi, Qatar and Malaysia, sources maintain that Hotel Leelaventure will still run and manage the Delhi and Chennai properties for 33 years for a fixed fee.

The Leela chain, in which ITC Hotels holds 12 per cent stake, has been in the red for the past several quarters, hit by business slump, competition and demand-supply mismatch.

Part of The Leela Group, The Leela Ventures is looking to divest stakes in its bouquet, full of luxury hotels, resort properties, IT and business parks, as well as real estate development.

The Group sold the luxury Kovalam beach hotel to industrialist Ravi Pillai in 2011 for Rs 500 crore and then divested the Chennai IT park building for Rs 170.17 crore to Reliance Industries in 2012.

Sources maintain it is now in talks to offload stakes in The Leela Palace, Delhi and The Leela Palace, Chennai to pare debt after moving the corporate debt restructuring (CDR) cell.
It may be noted that CDR is a mechanism where borrowers seek extension of loan period and adjustment of interest rate.

Hotel Leelaventure's debt as on September 30, 2013 was Rs 4,295.15 crore.