Group led by Oberoi Realty set to purchase Hotel Horizon
In a significant move for the luxury hospitality and real estate sector, Oberoi Realty Ltd, in collaboration with Shree Naman Developers and JM Financial Properties, has agreed to acquire Hotel Horizon Pvt Ltd (HHPL) for Rs 919 crore ($107 million) under the Insolvency and Bankruptcy Code (IBC) of India.
The insolvency process for HHPL led to the initiation of the Corporate Insolvency Resolution Process (CIRP) under the IBC. A consortium, comprising of the aforementioned companies, submitted a resolution plan which was approved by the Committee of Creditors (CoC).
The primary asset of HHPL is a prime 1.85-acre land parcel in Mumbai's upscale Juhu area, overlooking the Arabian Sea. This acquisition aligns with Oberoi Realty and Shree Naman Developers’ focus on developing premium real estate in Mumbai, particularly in the luxury hospitality and mixed-use property sectors.
The transaction requires approval from the National Company Law Tribunal (NCLT) before it can be finalized. The payment is expected to be made within 45 days of receiving the NCLT's approval.
Following the approval of the resolution plan, Oberoi Realty's shares experienced a 3% increase, indicating market optimism about the potential upside for the company despite recent declines. This acquisition strengthens Oberoi Realty's footprint in Mumbai's high-value real estate market, positioning the company for future growth in the luxury sector.
Other creditors and the income tax department also submitted claims, totaling Rs 1,928.34 crore. The final resolution amount of Rs 919 crore is less than 55% of the total approved claim amount, with the remainder of the claim effectively written off. The consortium will pay Rs 919 crore, along with any unpaid dues, for the full and final settlement and outstanding claims and unpaid costs.
This is the first acquisition under the Insolvency and Bankruptcy Code (IBC) for Oberoi Realty. The resolution plan was approved following the issuance of a letter of intent and the NCLT approved a claim of Rs 1,656.19 crore. The National Company Law Tribunal (NCLT) appointed an interim resolution professional for Hotel Horizon in January 2019. The approval for the resolution plan was given by the committee of creditors of Hotel Horizon.
The consortium that will acquire HHPL consists of Oberoi Realty, Shree Naman Developers, and JM Financial Properties. As part of the resolution plan, the consortium or a special purpose vehicle will acquire a 100% ownership of HHPL. Hotel Horizon is developing a retail-cum-hotel building.
Sources: [1] The Economic Times. (2021, February 26). Oberoi Realty to buy Hotel Horizon for Rs 919 crore under IBC. Retrieved from https://economictimes.indiatimes.com/news/company/corporate-trends/oberoi-realty-to-buy-hotel-horizon-for-rs-919-crore-under-ibc/articleshow/81350559.cms [2] Livemint. (2021, February 26). Oberoi Realty to buy Hotel Horizon for Rs 919 crore under IBC. Retrieved from https://www.livemint.com/industry/real-estate/oberoi-realty-to-buy-hotel-horizon-for-rs-919-crore-under-ibc-11614281354827.html [3] Moneycontrol. (2021, February 26). Oberoi Realty to buy Hotel Horizon for Rs 919 crore under IBC. Retrieved from https://www.moneycontrol.com/news/business/oberoi-realty-to-buy-hotel-horizon-for-rs-919-crore-under-ibc-7315671.html
Investing in the prime land parcel of Hotel Horizon Pvt Ltd (HHPL), located in Mumbai's Juhu area, aligns with Oberoi Realty and Shree Naman Developers' focus on premium real estate, particularly in the luxury hospitality and mixed-use property sectors. This acquisition, under the Insolvency and Bankruptcy Code (IBC), will further strengthen Oberoi Realty's footprint in Mumbai's high-value real estate market, positioning the company for future growth in the luxury sector.
