The operator of New York’s Pierre hotel is seeking to cut its debt by as much as 30 per cent in about a year by selling some of its assets, including the stake it holds in a luxury chain that runs the 21 Club restaurant.
Indian Hotels, part of the $109 billion coffee-to-cars conglomerate Tata Sons that owns the Taj brand of luxury hotels, prefers to raise capital from its own asset base and use that to help pay part of its $786 million of debt, Managing Director Rakesh Sarna said in an interview. On top of his sale list is its 6.98 per cent stake in the erstwhile Orient-Express Hotels, now called Belmond Ltd., he said.
“We have a debt situation to deal with,” Sarna said at his office in Mumbai. “I feel reasonably sure that by March 2017, we will make progress. I’d be disappointed if it was any less than 30 percent.”
For Sarna, reducing the debt from a level unseen since 2008 is crucial to his strategy of expanding the chain locally and in some Asian nations where business travel and tourism are picking up. The deleveraging is also part of Tata Chairman Cyrus Mistry’s Vision 2025 to help propel the group’s companies into the top 25 globally by market value and make their products and services available to a quarter of the world’s population.
Sarna ruled out refinancing of Indian Hotels debt, saying “you can only kick the can down the road so often,” and said he preferred what he called the “classic, transparent” way to cut the obligations.
Of the consolidated gross debt of 53.37 billion rupees ($786 million) at the end of December, B&K Securities India Pvt. estimates 5.5 billion rupees will come up for repayment in the year starting April 1, and 6.1 billion rupees the following year.
Cutting costs and improved tourist flows into India may help the company report its first full-year net profit of 359.5 million rupees, ending three straight years of losses, according to analysts’ forecasts by Bloomberg. The share price of the company has tripled since touching a four-year low in August 2013 and traded at 114.55 rupees on Monday.
News by Bloomberg, edited by Hospitality Ireland
