Tatas' voting powers in Bermuda-based hotel firm to rise if shareholders approve reclassification of shares.
The Tata group-controlled Indian Hotels Company’s voting power in Orient Express Hotels (OEH) will increase if the shareholders vote for annulling the powers of its class B shares.
This, if it goes through, will be beneficial for Indian Hotels, which had earlier made unsuccessful attempts to increase stake in the Bermuda-based luxury hotel chain.
OEH has convened a shareholder’s meeting on October 10 to get shareholders’ approval. The directors of OEH, who hold 81.2 per cent voting rights, have asked shareholders to “vote against the resolutions as these are contrary to the best interests of the company” in a statement issued in Bermuda.
The shareholders’ meeting is seeking approval to treat 'Class B’ shares – controlled by several OEH members, including founder James Sherwood – as 'treasury shares’. This means that the Class B shares that have super voting rights, will lose their importance.
| RIGHT MOVE | |
| Entity | Voting Right (%) |
| Indian Hotels | 2.2 |
| Jumeirah Asset | 1.8 |
| DE Shaw | 1.1 |
| Stephen Cohen | 1.4 |
| Blackrock | 5.2 |
| OEH directors (14 persons) | 81.2 |
This, however, will be beneficial to Indian Hotels as its voting rights would increase proportionately to the 11.5 per cent stake it holds. However, the percentage of increase could not be ascertained.
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By convening the shareholders’ meeting, the global hotel chain was responding to a demand by hedge funds DE Shaw and SAC Capital, who hold 7.6 per cent and 6.7 per cent stake in OEH, respectively. Earlier, the hedge funds had threatened to hold meeting “on their own”, in case the management does not hold it.
The directors of OEH and owners of class B shares have decided to call for the meeting to avoid a “potentially protracted and expensive dispute”. DE Shaw and SAC Capital (run by billionaires David Shaw and Stephen A Cohen) were looking at collapsing the company in an effort to put it up for sale.
The company's two largest shareholders – Indian Hotels and Dubai-based Jumeirah Assets – were looking at acquiring the company, but were rebuffed by OEH’s management. According to sources, the companies continue to pursue an opportunity to acquire OEH.
OEH is owners or part owners and managers of 51 luxury hotels, restaurants, tourist trains and river cruise businesses across twenty-five countries.