Total Pageviews

Friday, December 9, 2011

India Hospitality ends deal with Entertainment World

This story first appeared in DNA Money edition on Friday, December 9, 2011.

Blank-cheque firm India Hospitality Corp (IHC) has called off a Rs100 crore deal with real estate company Entertainment World Developers Pvt Ltd.

Under the deal, London Stock Exchange’s Alternative Investment Market listed firm was to lease and operate the realtor’s 10 under-development hotels and 14 food and beverage outlets in non-metros.

IHC was to also acquire Treasure Food & Beverage Pvt Ltd, the franchisee for Pizza Hut in central India, from Entertainment World.

IHC was doing the deal through its Indian subsidiary, Gordon House Estate Pvt Ltd, in which Entertainment World was to pick up a 15% stake.

The alliance announced in September 2009 was to be completed in three years. However, there was a buzz in the market sometime back that IHC was reviewing the partnership and now sources have confirmed that the deal has been called off.

"There has been no progress on the deal between IHC and Entertainment World. It has been terminated finally, with both parties free to go their own ways,” said an industry source.

Financial constraint faced by IHC was the key reason for the partnership to be called off, the source added.

Officials from IHC and Phoenix Mills, which owns 42% in Entertainment World Developers, were not available to comment.

The hotels and F&B outlets to be leased and managed by IHC were part of Entertainment World’s 24 million square feet development pipeline across India including 11 shopping malls, 10 hotels and 11 townships.

Entertainment World was developing a total of 900 hotel rooms across 10 locations. The first phase comprised 352 rooms across Nanded, Ujjain, Jabalpur, Bhilai and Raipur, and second phase 548 rooms across Chandigarh, Udaipur, Amravati, Indore and Thiruvanathapuram.

Faced with own set of financial challenges, Entertainment World is understood to be going slow on further developments, including those that were under the deal with IHC, and is currently believed to be undergoing a restructuring exercise to turn around its existing operations.

It was planning raise Rs500-600 crore last year through an initial public offering by selling 25-30% stake mid-2010, but could not because of unfavourable market conditions.

No comments:

Post a Comment