Decks cleared for Brookfield’s acquisition of Hotel Leela assets

Our Bureau Mumbai | Updated on September 26, 2019 Published on September 26, 2019

vAll hurdles have now been cleared for Brookfield to acquire some assets owned by Hotel Leela Venture (HLV) in one of India’s largest hotel deal worth nearly ₹4,000 crore. The Securities Appellate Tribunal on Wednesday quashed ITC’s appeal against the sale of assets. Tobacco major ITC, which also owns five star hotel properties and is a shareholder in Hotel Leela, had complained that the deal with Brookefield violated provisions of related-party transactions. The deal involves HLV’s four hotel properties and a land parcel.

Following the complaint by ITC, SEBI had put the deal on hold earlier this year. But a few weeks ago, the regulator allowed HLV to conduct a shareholder vote-seeking approval for sale of the assets to Brookfield. Accordingly, the hospitality company had issued fresh postal ballot notices to its shareholders on August 13, with plans to declare results on September 18. SEBI also allowed JM Financial Asset Reconstruction Company, which owns 26 per cent in HLV, to vote on the deal.

In an oral order on Wednesday, SAT rejected ITC’s plea challenging the SEBI order.

According to the proposed sale agreement, the promoters and affiliates of HLV are also entitled to a consideration of ₹300 crore from Brookfield on account of any intellectual property (IP) held, apart from certain business expansion services that the promoters had agreed to provide to the investor. The assets include hotel properties in Delhi, Bengaluru, Udaipur and Chennai. It involved a separate deal between Brookfield and HLV promoters for IP where shareholders had raised objection.

Published on September 26, 2019
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