Market regulator Sebi has restricted Hotel Leelaventure from promoting its four resorts and different belongings to Brookfield Asset Management in an 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 its lender JM.
Financial over a joint petition filed by ITC and its investment arm Russell Credit Ltd. ITC and Russell Credit collectively hold 8. According to cent of the issued share capital of Hotel Leelaventure, seventy-two 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) introduced the sale of its four hotels in Bengaluru, Chennai, Delhi, and Udaipur and 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 had 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 concerning postal ballot note looking for shareholders’ nod for sale, the letter by Sebi to HLVL said.
“…While representations are being tested with the aid of Sebi, given the 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 observed dated March 18 is acted upon till further instructions from Sebi,” Hotel Leelaventure said in a regulatory filing.
ITC, in its petition filed before the NCLT, has alleged that HLVL’s choice to promote its four accommodations and different belongings to Brookfield Asset Management would go away the hospitality company 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 interlinked 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, including it, “will receive nothing and maybe left preserving nugatory shares with no underlying commercial enterprise or belongings left inside Hotel Leelaventure.”
ITC has similarly alleged that the valuation file was no longer tabled inside the audit committee meeting or the board meeting on March 18, 2019, when a decision to sell the houses was 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 the majority appearing against minority shareholders using oppressive means, as they own seventy-three percent.
“We want safety for our shareholding so the promoters can’t break out with a fraudulent deal,” he added. Khambatta mentioned that in 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. According to the cent, this brought about the dilution of ITC’s shareholding to under ten,
On March 18, HLVL entered into a binding agreement with a Brookfield Asset Management subsidized personal actual property fund to promote, by using a manner of slump sale, four owned Leela motels placed at Bengaluru, Chennai, Delhi, and Udaipur and the property that it holds in Agra.
The transaction included the task of all motel control contracts presently in operation and all under-development, along with the employees of the accommodations it delivered.
Proceeds of the sale “can be paid to the organization’s creditors toward repayment of dues,” the submitting on March 18 had said. “After completion of the transaction above, all borrowing of the business enterprise from all banks and monetary establishments would stand repaid,” it had added.