The Securities and Exchange Board of India has stayed Hotel Leelaventure’s plan to sell its assets to Canadian fund Brookfield after a compliant from ITC alleging that the deal violated provisions of related party transactions.

ITC has moved the National Company Law Tribunal against Leela for ‘mismanagement and oppression’ and Life Insurance Corporation. ITC holds 7.92 per cent stake in Hotel Leela.

SEBI order on Wednesday came ahead of Leela’s postal ballot seeking approval for the sale of assets. In a stock exchange filing, Leela said that they have received a letter from SEBI that the transaction should be put on hold till further directions.

Leela was planning to sell assets comprising hotel properties in Delhi, Bengaluru, Udaipur and Chennai for ₹3,950 crore to Brookfield. The company had called for a shareholder approval on April 24. The deal was to give Leela promoters and affiliates a consideration of ₹300 crore from Brookfield on account of any intellectual property held by them and also for certain business expansion services that the promoters have agreed to provide the investor.

“While SEBI is examining the representations in view of paucity of time and interest of the investors in securities you are advised that none of the transactions proposed in the PBN (post ballot notice) of 18 March are acted upon till further directions from SEBI,” SEBI said in its letter to Leela. NCLT has posted the hearing of the matter for next month.

 

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