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Indian Hotels Company has offloaded its stake in ELEL Hotels & Investments Ltd, which owned Sea Rock Hotel in Mumbai. The company, which runs the Taj Group of hotels, had picked up 85% stake in ELEL in June last year at a cost of Rs680 crore.
In a statement to the National Stock Exchange at the begining of this week, IHCL said: “For strategic reasons, IHCL has restructured its shareholding in ELEL. Indian Hotels continues to have an operating and management contract and a technical services agreement with ELEL to develop the Sea Rock project”.
It has the option to "Repurchase ELEL shares after 37 months and upon the happening of certain events,” said the statement. The statement did not provide any other details.
“IHCL has shifted its investment in ELEL, into an SPV. IHCL will continue to be fully involved with the design and development of the proposed convention centre/hotel on the site. IHCL has the option to take this asset back on its balance sheet in three years' time. The important issue is that the asset continues to be under the ownership of the Taj Group and developed under the guidance of IHCL," said a spokesperson.
The company did not disclose details such as the ownership of the SPV and the terms under which the shares are transferred to the SPV.
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The hotel major was to demolish Sea Rock Hotel and develop a hospitality structure, which would have also housed a convention centre, besides commercial and retail outlets.
IHCL had also said that it wanted to integrate the site with its Taj Lands End hotel in Bandra, Mumbai. The funds for the project were to come from the Rs1,400 crore rights issue made in 2008 and also from the liquidity in the system.
The acquisition was made with an option to raise the stake to 100%. The company had said that the cost of acquisition was significantly below transactions done in other areas. The project was to be up in three years.
Source: The Hindu Business Line
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