The Hindu Business Line : Rakesh Jhunjhunwala to acquire 13.5% in Viceroy Hotels

CLOSE on the heels of picking equity stakes in some of the Andhra Pradesh-based companies, including Nagarjuna Construction Company, Mr Rakesh Jhunjhunwala, the Mumbai-based stockbroker and proprietary investor, is now set to acquire around 13.5 per cent stake in Viceroy Hotels Ltd (VHL).

The acquisition is through a preferential offer of equity shares as well as share warrants by VHL in favour of Mr Jhunjhunwala and his associates at a price of Rs 60 per equity share and share warrant.

Confirming the development, the VHL Finance Director, Mr K. Narasimha Rao, told Business Line that the preferential offer was aimed at raising funds of around Rs 28 crore to part finance the ongoing hotel expansion plan from 165 rooms to 308 rooms taken up at a cost of Rs 86 crore. The VHL promoters would also subscribe to the preferential offer. The company has already completed financial closure for the balance funds of around Rs 60 crore, he said.

VHL has signed a master franchisee agreement with the global hospitality major Marriott International Inc to become its franchisee hotel. Further, the company is also in the process of merging some of the hospitality entities under the Viceroy group into VHL, apart from plans to acquire 3-4 properties in Visakhapatnam and Hyderabad for developing 3-star and 4-star hotels, Mr Rao said.

Aimed at starting operations as a Marriott International Hotel by October-end, VHL is at an advanced stage of completion of expansion. To part finance these capital expenditure programmes, the company proposes to issue 21.12 lakh equity shares of Rs 10 each at a price of Rs 60 per share on a preferential offer basis to the promoters and others, including Jhunjhunwala & Associates.

Of this, the VHL promoters would subscribe to six lakh shares, amounting to three per cent of post-issue equity. Mr Rakesh Jhunjhunwala & Associates would subscribe to 15 lakh shares, constituting 7.51 per cent stake.

Further, Mr Narasimha Rao said the company also proposes to issue 25.52 lakh warrants at a price of Rs 60 per warrant on a preferential basis, of which promoters would subscribe to seven lakh warrants. The balance would be offered to Mr Rakesh Jhunjhunwala & Associates.

The issue of equity shares and share warrants would enable Jhunjhunwala and associates to acquire around 13.5 per cent on the expanded equity base. The post-issue paid-up capital of VHL would stand at Rs 22.52 crore as against the existing level of Rs 17.86 crore, Mr Rao said.

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