The Indian Hotels Company has acquired the Regent Hotel in Bandra from the Lokhandwala Hotels Pvt Ltd. The Taj acquired 19.9 per cent of equity interest in Lokhandwala Hotels Pvt Ltd for a consideration of Rs 24 crores, whilst the balance 80.1 per cent has been acquired by ICICI Trustee Services Ltd (I-Ventures) for a consideration of Rs 95 crores. The hotel will be renamed Taj Lands End, Mumbai.

Lokhandwala Hotels Ltd will function as a holding company for the foreseeable future. The Taj can acquire the balance equity in one or more tranches in accordance with the terms of the agreement drawn up with I-Ventures. The Indian Hotels Company Ltd will operate the hotel under a license agreement.

The price at which Indian Hotels will buy back ICICI’s 80 per cent stake is pre-determined and will be at a premium of about 12.25 per cent cost per annum. The consortium of lenders to LHL, lead by ICICI, IDBI etc, have restructured their loan package to the new entity. The effective total cost of acquisition is Rs 415 crores or Rs 80 lakhs per room, which is about 40 per cent less than the replacement cost of an equivalent property. But this includes a debt of about Rs 331 crores.

"The entire amount is new debt. The old debt has all been repaid and restructured. If you add the total equity and debt, it comes to around odd-Rs 450 crores. Of the Rs 330 crores debt, around Rs 130 crores will be interest-free for around two-and-a-half years. If you, therefore, take out the interest element, the net cost comes to around Rs 415 crores," Mr Zubin Dubash, executive director, IHCL, said. He further said that the debt will stay in the new company. None of it will be in Indian Hotels’ books and will not be guaranteed by Indian Hotels.