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Quality Care set to buy Venkataramana Hotels

C.R. Sukumar

HYDERABAD, Dec. 24

THE promoters of Venkataramana Hotels Ltd (VHL), the Hyderabad-based company that owns the star hotel Bhaskar Palace in the State Capital, are currently at an advanced stage of negotiations with the management of Quality Care India Ltd (QCIL) for the tak eover of VHL by the latter.

Sources close to VHL promoters told Business Line that the VHL management has recently submitted a proposal to the Industrial Finance Corporation of India Ltd (IFCI), the lead financial institution, for the proposed takeover of the company by QCIL.

With QCIL expressing its willingness to clear all the dues of VHL to the banks and FIs through a one-time settlement (OTS), the institutions -- IFCI, IDBI and ICICI -- recently cleared the proposal of QCIL to acquire VHL. ``Now the agreement of t akeover will be finalised and the formalities will start,'' sources said.

The three financial institutions -- IFCI, IDBI and ICICI -- have agreed to waive the entire simple and compound interest, liquidated damages and penal charges accrued and due on the term loans. However, they have stipulated a condition that to a vail of this facility, VHL should make a down payment of Rs 3.75 crore and obtain approvals of other lenders for the OTS.

As on March 31, 2000, VHL's paid-up equity stood at Rs 12.1 crore and capital reserves at Rs 1.48 lakh. As against this, the total debt burden of the company stood at Rs 58.47 crore. Interestingly, of the total debt burden, interest accrued and due on th e loans alone stood at Rs 28.89 crore and funded interest at Rs 9.99 crore. Further, the accumulated losses stood at Rs 36.09 crore as on last count.

Meanwhile, the VHL board has adopted a resolution to convert the 50,000 cumulative convertible preference shares of Rs 100 each allotted to the Unit Trust of India (UTI) two years ago into five lakh equity shares of Rs 10 each. A resolution to this effec t is being placed before the VHL shareholders for their consent at the VHL annual general meeting scheduled for December 26.