Diversified group ITC Ltd has moved the Mumbai Bench of the National Company Law Tribunal (NCLT) against luxury hospitality group Hotel Leelaventure Ltd, alleging oppression and mismanagement.
ITC has also filed two applications seeking waiver of the requirement of minimum threshold of 10 per cent shareholding, and urgent hearing, said a regulatory filing by Hotel Leelaventure to the bourses. ITC holds a 7.92 per cent stake in Hotel Leelaventure. The matter will come up for hearing on Wednesday.
While the exact reasons for the allegations are still unclear, sources are linking ITC’s move to Hotel Leelventure’s decision to sell a part of its hotel business and some land parcel to Brookfield. ITC, however, did not mention the reasons. When contacted, a company spokesperson said that the matter was sub judice and therefore he would not like to comment (on it).
Sale to Brookfield
On March 18, Mumbai-based Hotel Leelaventure, in a regulatory filing, said Brookfield has agreed to acquire four hotels and a land parcel from it for ₹3,950 crore. At the end of FY18, the hospitality major had borrowings to the tune of ₹3,800 crore.
The sale consists of four hotels of its own in New Delhi, Bengaluru, Chennai and Udaipur, managed properties in Gurugram, Delhi, Goa and Kovalam, land in Agra and the subsidiary, Leela Palace & Resorts. These assets accounted for 80 per cent of its income and 88 per cent of its net worth in FY18.
A proxy advisory report by Stakeholders Empowerment Services (SES) raised concerns on the deal. The report talked of lack of clarity in the entire proposal because of which shareholders were unable to make an informed decision.
The SES report claimed lack of clarity on matters such as future plans of Leelaventure after the asset sale, the absence of a valuation report in support of the monetary value assigned to the assets proposed to be sold, legal standing of parallel agreements with the proposed sale, and fairness of the consideration proposed to be paid to the promoters.
