EIH, which owns and runs the Oberoi and the Trident brand of hotels, is planning to raise Rs.1,300 crore through a rights issue. The issue has been approved by a meeting of the board of directors of the flagship company.
In a communication late on Thursday, the company said that the board also decided to constitute an issue committee which will finalise the rights price, the ratio and all modalities relating to the proposed rights issue.
The decision comes at a time when the company is in the thick of speculation about the end-use of the proposed issue, especially in the wake of oil and petrochemical major Reliance Industries picking up a 14.12 per cent stake in the company last month. Having picked up the first lot of EIH shares, RIL made another purchase taking its stake to 14.8 per cent.
The FMCG major ITC already has a 14.98 per cent holding in EIH and the move to bring in RIL was seen as a step to ward off ITC from making a takeover attempt although ITC Chairman Y. C. Deveshwar had ruled out a ‘hostile takeover'.
Subsequent to this development, EIH which had over the last few years been increasing the promoters holding in the company to 46 per cent (from 39 per cent earlier) saw a dilution to 32.3 per cent. As of June 30, 2010, insurance companies have a 12.68 per cent holding in EIH.
In India, it has 11 hotels under the Oberoi brand and eight properties under the Trident brand. It is now has under construction and development properties in Dubai, Abu Dhabi, Muscat and Morocco and four more in domestic locations.
