Brookfield is a step closer to buying Leela hotels
THE SALE WAS OKAYED BY LEELA’S BOARD IN MARCH BUT WAS PUT ON HOLD AFTER DIRECTIONS BY SEBI
MUMBAI: The Securities Appellate Tribunal (SAT) on Thursday dismissed an appeal by ITC Ltd challenging the sale of Hotel Leelaventure Ltd’s assets to Brookfield Asset Management Inc, bringing the Canadian alternative asset manager a step closer to acquiring four luxury Leela hotels. The sale, worth more half a billion dollars, was approved by Leela’s board in March but was put on hold following directions by the Sebi based on complaints by ITC and Life Insurance Corp. of India (LIC).
Hotel Leelaventure on Thursday posted on BSE the voting results of a postal ballot in the asset sale. The majority of the shareholders (89.12%) voted in favour of the deal, the results showed. Sebi told Hotel Leelaventure in July to conduct a fresh shareholder vote seeking approval for the sale of the assets to Brookfield. Accordingly, the hospitality company issued fresh postal ballot notices to its shareholders on August 13. It planned to declare the results on September 18, but did so on Thursday.
The markets regulator had also allowed JM Financial Asset Reconstruction Co. Ltd, which owns a 26% stake in Leela, to vote on the deal.
ITC, which holds 7.92% in Hotel Leelaventure, had moved SAT challenging the market regulator’s order, rejecting its argument that the sale of assets to Brookfield should not be allowed because of related-party transactions.
The deal hit a roadblock after Hotel Leelaventure’s minority stakeholders, ITC and LIC, approached Sebi alleging that JM Financial ARC was a related party and could not vote on the board’s resolution approving the deal.
In an oral order on Thursday SAT rejected ITC Ltd’s plea. The Economic Times reported online that ITC is seeking to challenge the SAT ruling in the Supreme Court.
“This (order) means that the deal will be closed soon. There’s nothing much to be done now. This was the only thing holding up the deal. The deck has been cleared,” said a person who is closely involved with the deal.
Email queries to a ITC remained unanswered till press time. A spokesperson for Brookfield declined to comment on the tribunal’s order and the proposed transaction.