MGM buys Le Meridien, may turn it into hospital

MGM buys Le Meridien, may turn it into hospital

D.Govardan@timesgroup.com

Chennai:19.07.2021 

M K Rajagopalan, chairman and managing director of MGM Healthcare Private Limited (MHPL), has acquired Appu Hotels Limited — which owns five star hotels under the brand Le Meridien in Chennai and Coimbatore — for ₹423 crore. The development comes after the NCLT Chennai’s Division Bench – I overruled the objections raised by original promoters led by Palani G Periasamy on valuation of the properties and passed a final order on Friday, July 15, 2021.

The bench also dismissed a petition filed by the promoters under Section 12A of the IBC which permits the adjudicating authority to allow withdrawal of application with 90% voting approval by creditors. MGM is likely to convert Le Meridien hotel located in Guindy into a healthcare facility and may retain the Coimbatore property as a hotel.

‘Assets worth ₹1,600 crore approved to be sold for ₹423cr’

While Rajagopalan declined to comment, Periasamy did not respond to calls from TOI on Sunday.

“The NCLT order allows Appu Hotels to appeal in 30 days. It will appeal soon,” a source said.

“It is a fact that Rajagopalan offered ₹423 crore and NCLT Chennai approved it. But we have raised objection to the valuation under Section12A. How can properties worth ₹1,600 crore be valued so low,” Periasamy had told TOI a few weeks ago.

Rajagopalan is chairman of Sri Balaji Educational & Charitable Public Trust and Sri Balaji Vidyapeeth Trust, which run Mahatma Gandhi Medical College & Research Centre (MGMCRI), established in Puducherry in 2001, and Sathya Sai Medical College in Kancheepuram district in 2007. Sri Balaji Vidyapeeth reported a revenue of ₹636 crore with a surplus of ₹345 crore in FY20, according to a CARE Ratings Limited analysis.

Tourism Finance Corporation of India initiated Corporate Insolvency Resolution Process (CIRP) under Section 7 of IBC, 2016, against Appu Hotels for pending debts and orders were passed by NCLT in May 2020. Secured and unsecured creditors then put up claims of around ₹389 crore.

The interim resolution professional (IRP) appointed registered valuers arrived at a fair value of ₹730.9 crore and liquidation value of ₹569.3 crore. Rajagopalan, Madhav Dhir and Kotak Special Situations submitted bids, but only Rajagopalan stayed on course with a final resolution plan offering ₹423 crore, approved by a 87.39% majority in the ninth meeting of the Committee of Creditors on January 22.

Estimating the property at ₹1,600 crore, promoters led by Periasamy objected to the resolution plan citing procedural lacunae and misinformation in the conduct of the CIRP. Counsel for the promoter said the fair value and liquidation value were at least 30% lower than another valuation undertaken in September 2019. Even taking into account the Covid-19 pandemic situation and the resultant market shock caused, a 70% fall in valuation of the corporate debtor is “untenable and incredulous”, counsel said.