Tata Group-promoted Indian Hotels Company Ltd (IHCL) will raise up to ₹1,000 crore through a rights issue.

In its board meeting held on Thursday, the company considered and approved the rights issue. Accordingly, Indian Hotels’ existing shareholders would be issued compulsorily convertible debentures.

The move is, however, subject to shareholder and regulatory approvals, the company said in a filing with the BSE.

The terms and conditions of the rights issue, including the rights entitlement ratio, the issue price, record date, timing and other related matters, shall be decided subsequently by a duly constituted committee of the board.

The Indian Hotels scrip on Thursday closed at ₹71 apiece on the BSE, up 1.14 per cent.

While the company refused to share details on how it plans to use the proceeds, analysts feel the funds raised would likely be used to fund the company’s expansion plans as well as to pay off its debts.

The company’s consolidated debt stands at about ₹3,800 crore.

The company, which has 14,423 rooms across 119 hotels, reportedly plans to open 21 hotels over the next two years.

₹670-crore loss IHCL, that owns and runs The Taj, Vivanta, Gateway and Ginger chain of hotels, had last year booked a loss of ₹670 crore on its investment in the luxury hospitality chain — Orient-Express Hotels (OEH).

IHCL had acquired 11.85 per cent stake in the New York Stock Exchange-listed hotel for about $211 million in 2007. However, the deal backfired as the Bermuda-based hotel lost its share value following the global economic slowdown.

Following a public spat lasting six years over a dual-class and complicated takeover structure, the Tata Group company had to finally let go of the $1.2-billion bid for Orient-Express citing the unfavourable economic environment condition in November last year. Orient-Express has 45 properties across 22 countries. These properties include hotels, tourist trains, restaurants and cruise ships.

Indian Hotels owns 6.9 per cent stake in Orient-Express and has invested about ₹1,000 crore in buying these shares.

Meanwhile, the board has also approved reclassification of authorised share capital of the company aggregating to ₹200 crore by dividing these into 100 crore equity shares of ₹1 each and one crore cumulative redeemable preferences shares of ₹100 each into 200 crore equity shares of ₹1 each aggregating to ₹200 crore.

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