EIH Associated Hotels plans Rs 108 cr rights issue

The issue is scheduled to open on Sept 26 and would close on Oct 12, 2012

EIH Associated Hotels Ltd, a part of the Oberoi Group, has fixed Rs 108.8 crore as the size for its proposed rights issue.

The company on Wednesday informed the BSE that the Rights Issue Committee of the board of directors at its meeting held on August 31 had approved the size.

The company proposes to issue 1,08,81,481 equity shares on a rights basis to its existing equity shareholders aggregating around Rs 108.8 crore.

The issue is scheduled to open on September 26 and would close on October 12, 2012.

Plans are to repay or prepay certain loans entirely or partially, subject to utilisation of maximum of Rs 90 crore from the net proceedings of the proposed rights issue, according to the draft letter of offer filed by the company with Sebi.

“We have availed certain long-term and other short-term loan facilities from various banks. The amount sanctioned on a standalone basis under these loan facilities aggregated to Rs 3,480 million (Rs 348 crore) and the amount outstanding under these facilities as on March 23, 2012 aggregates to Rs 2,300 million (Rs 230 crore),” according to the draft letter.

However, the company is not looking at any specific expansion plans for acquiring or developing new properties or increasing the number of rooms in its existing hotels. It would continue to depend on the room revenue from the existing hotels, which is a significant portion of its income, it added.

The company, at present, owns eight hotels, including two super luxury (The Oberoi Rajvilas, Jaipur, and The Oberoi Cecil, Shimla), two business hotels (Trident in Chennai and Bhubaneswar) and three leisure ones (Trident in Agra, Jaipur and Udaipur) under The Oberoi and Trident brands in India. One hotel, the Trident in Kochi, Kerala, is owned through its wholly-owned subsidiary – Island Hotel Maharaj Limited.

The hotels under EIH use The Oberoi and Trident brands, which belong to one of its promoter and promoter group entity Oberoi Hotels Pvt Ltd (OHPL), and they pay a royalty of 1 per cent of their respective total revenues to OHPL, it added.