Market regulator Sebi has restricted Hotel Leelaventure from promoting its four resorts and different belongings to Brookfield Asset Management in a Rs three,950 crore deal until it’s in addition orders after a representation via Kolkata-based ITC, the debt-ridden firm stated Wednesday.
Meanwhile, the Mumbai bench of NCLT issued notices to Hotel Leelaventure, its promoters alongside it’s lender JM Financial over a joint petition filed by ITC and its investment arm Russell Credit Ltd.
ITC and Russell Credit which collectively hold 8. Seventy-two according to cent of the issued share capital of Hotel Leelaventure have sought a waiver of 10 percent minimum shareholding for minority shareholders to be counted in control subjects.
The National Company Law Tribunal (NCLT) adjourned the problem to June 18, 2019, for the subsequent hearing.
On March 18, Hotel Leelaventure Ltd (HLVL) had introduced the sale of its four hotels positioned in Bengaluru, Chennai, Delhi, and Udaipur, as well as a property to Canadian funding fund Brookfield for Rs three,950 crores. It had sought shareholders approval and voting is scheduled to quit on April 24.
The Securities and Exchange Board of India (Sebi) said it has obtained representations from ITC, which has also moved the National Company Law Tribunal against Hotel Leelaventure alleging “oppression and mismanagement”, and minority shareholder Life Insurance Corporation (LIC).
ITC has made certain allegations against HLVL, its promoters and JM Financial Asset Reconstruction Company Ltd with respect to postal ballot note looking for shareholders nod for the sale, the letter by Sebi to HLVL said.
“…While representations are being tested with the aid of Sebi, in view of paucity of time worried and within the hobby of investors in securities, you’re counseled to make sure that not one of the transactions proposed in the postal poll observe dated March 18 are acted upon till further instructions from Sebi,” Hotel Leelaventure said in regulatory filing.
ITC, in its petition filed before the NCLT, has alleged that HLVL choice to promote its four accommodations and different belongings to Brookfield Asset Management would go away the hospitality company as a “shell employer” alleging that the transaction was “prejudicial, oppressive and even fraudulent.”
After the deal, Hotel Leela venture could remain an agency “with handiest liabilities” and it would advantage handiest the promoters who, will acquire at least “Rs 300 crore in contemporaneous and concomitant aspect offers which are inter-linked with the disposal of the undertakings of the agency, ITC stated inside the petition filed earlier than NCLT Mumbai.
According to ITC, the minority shareholders which includes it “will receive not anything and may be left preserving nugatory shares with no underlying commercial enterprise or belongings left inside Hotel Leelaventure.”
ITC has similarly alleged that the valuation file became no longer tabled either inside the meeting of the audit committee or the board meeting on March 18, 2019, when a decision to sell the houses changed into taken.
“At neither meeting turned into any valuation document tabled despite the truth that the creditors, whose approval to the transaction had been sought, had questioned whether or not any valuation report(s) have been received and what system have been observed earlier than finding out to head ahead with Brookfield,” alleged ITC.
It further stated that although any valuation file existed Hotel Leela “did not offer inspection of any valuation document(s) in recognition of the Transaction.”
During the court cases of NCLT, senior advocate Darius J Khambatta, representing ITC advised the tribunal:”We have been suppressed of our rights as a shareholder. The postal ballot word has no longer addressed many troubles. It is a traditional case of majority appearing against minority shareholders the use of oppressive means, as they very own seventy-three percent.
“We want safety for our shareholding in order that the promoters can’t break out with a fraudulent deal,” he added.
Khambatta mentioned that during 2017, JM Financial ARC sold the debt of Hotel Leela from banks and was given 26 consistent with cent shareholding after converting the debt into equity. This brought about the dilution of ITC’s shareholding to under 10 according to the cent.
On March 18, HLVL had entered into a binding agreement with a Brookfield Asset Management subsidized personal actual property fund to promote, by using a manner of slump sale, 4 owned Leela motels placed at Bengaluru, Chennai, Delhi and Udaipur and the property that it owns in Agra.
The transaction included the task of all motel control contracts presently in operation in addition to all under-development, along with the employees of the accommodations, it delivered.
Proceeds of the sale “can be paid to the creditors of the organization toward repayment of dues,” the submitting on March 18, had said.
“After completion of the aforesaid transaction, all borrowing of the business enterprise from all banks and monetary establishments would stand repaid,” it had added.