Stomping down heavily on Hotel Leela Venture Ltd, market regulator Securities and Exchange Board of India (SEBI) has barred Leela Venture from selling its 4 high-profile hotels, comprising Hotel Leela Palace Udaipur and other assets to the Canadian investment fund Brookfield Asset Management.
The dramatic move came just after a day when India Tobacco Company (ITC) which holds around 8% of stake in the company, moved the National Company Law Tribunal (NCLT) in contrary to Hotel Leela Venture claiming “oppression and mismanagement”.
ITC also claimed that the deal between Leela Venture Ltd and the Canadian investment fund Brookfield was against the company’s and stockholders’ interests. SEBI has also received representations from ITC on the same matter and had mentioned this in its letter to Leela.
ITC’s plea was cited before the Mumbai bench of the NCLT, which postponed the matter for hearing on the coming Wednesday, Hotel Leela Venture had said in a regulatory filing on Tuesday.
“Representations and allegations against Hotel Leela Venture Ltd, as received by SEBI in relation to the issue, concerns the interest of the investors in the security market. While the representations are still being examined by SEBI, in scarcity of time involved and keeping the interest of investors in mind, they are advised to make sure that none of the transactions planned in the postal ballot notice dated 18 March 2019 are acted upon till further directions from SEBI,” states Hotel Leela Venture in the filing.
With the petition to Company Law Tribunal, ITC also filed two applications seeking a waiver of the requirement of the minimum threshold of 10% shareholding. ITC holds a 7.92% stake in Hotel Leela Venture. Earlier, the board of Hotel Leela Venture, while selling the hotel business, together with all assets and liabilities of the hotels located at Bangalore, Chennai, Delhi and Udaipur on a slump sale basis, split out Rs.150 crore each to the former promoters – Vivek and Dinesh Nair. Further, the sale to Brookfield also included 100% shareholding of the company in Leela Palaces and Resorts Ltd which owns the property and holds licenses for the development of a hotel in Agra.
All other management contracts currently in operation including the employees have been reassigned to Brookfield. The total payable amount to the company is of Rs.3,950 crore which is subject to adjustments on account of net working capital plus the applicable transaction cost. It is being said that the company will continue to operate the hotel in Mumbai, own a piece of land in Hyderabad and the joint development project of residential apartments in association with Prestige Developers in Bangalore.
Canadian corporation Brookfield still reserves the right of refusal over the company’s hotel in Mumbai, as a part of the business transaction.
News Source: Udaipurtimes