Shares of Samhi Hotels Ltd soared 10% on 24 April after the company announced a strategic partnership with global institutional investor GIC.
As part of the agreement, GIC would buy a 35% ownership in Samhi’s subsidiaries, which include the upscale hotels Hyatt Regency in Pune, Courtyard & Fairfield by Marriott in Bengaluru ORR, and the recently acquired Trinity Hotel in Bengaluru Whitefield.
The aforementioned transaction, with an enterprise value of Rs 2,200 crore, would require an investment of around Rs 752 crore, from which Rs 603 crore of the amount would be used to pay off Samhi’s debt and cover transaction expenses. The remaining funds will be used to partially fund capital expenditures for the dual-branded Westin or Tribute Portfolio Bengaluru Whitefield hotel over the next two years.
Following the transaction, the company intends to reduce its debt by approximately Rs 580 crore. Samhi estimated that this would raise the company’s net profit by 15%-20%. Furthermore, its net debt-to-EBITDA ratio is forecast to reduce from 4.9x to 3.5x following the deal and subsequently to 3x during the following year.
The company, in its regulatory filing, added, “The transaction follows our stated strategy of capital recycling and will lead to significant reduction in debt and partnership with a global investor of GIC’s stature for funding further growth.”
The company added that the debt reduction and partial finance of new projects will significantly increase its future cashflows.
At 11:42 am, the shares of Samhi Hotels were trading 9.22% higher at Rs 190 on NSE.
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