DLF to pare Rs.2,500 cr debt with Amanresorts sale, Dwarka land refund

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DLF concludes the sale of luxury hospitality chain Amanresorts for $358 million

DLF Ltd will be able to reduce its debt by Rs.2,500 crore, or by about 13% of its outstanding loans, after it sold the Amanresorts chain of luxury resorts and got a much-awaited refund on a land in Delhi.
DLF, the country’s largest developer by value, on Monday said it had concluded the sale of luxury hospitality chain Amanresorts for $358 million (Rs.2,230 crore).
Also, after a long wait, DLF finally got a refund of Rs.675.8 crore from the Delhi Development Authority (DDA) for returning a piece of land in Dwarka where it had planned to build a convention and exhibition centre, the company informed the National Stock Exchange on Monday.
Adhidev Chattopadhyay, an analyst at HDFC Securities Ltd, said the closure of these two large deals will allow DLF to achieve its target to lower its debt to about Rs.17,000 crore this fiscal year. The company had a net debt of Rs.19,508 crore as on 30 September.
DLF has been making rigorous attempts to discard its many non-core assets to bring down debt. A DLF spokesman said the company will use the proceeds from both the transactions to pare debt.
DLF had bought the 35-acre Dwarka land parcel for Rs.901 crore from DDA in 2007. On Monday, DLF said it received Rs.675.8 crore from DDA as full and final settlement after forfeiture of the earnest money in terms of the settlement agreement.
Motilal Oswal Securities Ltd had in a report in January said the key non-core assets at DLF’s disposal were the Dwarka land and another 17-acre parcel in Hyderabad from which around Rs.550 crore is expected.
Sandipan Pal, an analyst at brokerage Motilal Oswal, said that while DLF’s debt reduction efforts are commendable, the developer now needs to launch projects and show operational strength to get strong cashflows, which is the only way to keep its debt from rising again.
The closure of the Amanresorts deal has happened more than a year after DLF announced its intention to sell its stake back to the founder.
The company said its subsidiary DLF Global Hospitality Ltd sold its 100% stake in Silverlink Resorts Ltd, which runs Amanresorts, to Aman Resorts Group Ltd, a joint venture between Peak Hotels and Resorts Group Ltd and Adrian Zecha, the founder of Amanresorts, in the form of a management buyout.
The deal excludes the Lodhi Hotel in Delhi, which shall remain a part of DLF.
DLF Global Hospitality had purchased 100% equity in Amanresorts, including the Lodhi Hotel, in 2007 from a group of investors for $400 million.
“This sale of business is another major milestone in DLF’s strategy to focus on its core business of real estate and divest non-core businesses and assets,” Saurabh Chawla, executive director, finance, DLF, said in a statement.
With the conclusion of the Amanresorts deal, DLF has exited most of its non-core businesses, such as wind energy and DLF Pramerica Life Insurance Co. Ltd, said Pal of Motilal Oswal.
DLF’s shares closed at Rs.142 on BSE on Monday, while the benchmark Sensex declined 0.21% to 20334.27 points.
 

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