ITC Hotels Demerger: ITC to hold meeting of ordinary shareholders on June 6 to approve scheme

The move comes following an order by the National Company Law Tribunal (NCLT) to convene a meeting of the ordinary shareholders of the company.

The announcement was made after market hours and ITC shares on Wednesday ended flat on the NSE at Rs 429.40.

The board had on August 14 approved the scheme of arrangement under which the shareholders of ITC will get 1 share in the demerged hotels business for every 10 shares held in the parent company.

Once the demerger is completed following approval from shareholders, creditors, stock exchanges, Sebi, NCLT and other regulatory authorities, ITC is likely to get the new stock listed on stock exchanges in another 15 months.

ITC shareholders will directly hold about 60% in ITC Hotels in proportion to their stake in the parent company. The remaining 40% stake will continue with ITC. No cash consideration is payable under the demerger scheme.

"The scheme would unlock value of the hotels business for existing shareholders of the demerged company through independent market driven valuation of their shares in the resulting company, which will be listed pursuant to the scheme, along with the option and flexibility to remain invested in a pure play hospitality focused listed entity," ITC said.

As part of the demerger, ITC Hotels would be given a licence to use ‘ITC’ prefix as part of its corporate name and also as part of some of its properties or brand name for royalty fee.

The share entitlement ratio has been determined on the basis of the share capital or the number of shares of the two companies and has no bearing on the market capitalisation of ITC Hotels.

The Kolkata-based diversified conglomerate said its hotels business has matured over the years and is well poised to chart its own growth path and operate as a separate listed entity in the fast-growing hospitality industry, whilst continuing to leverage ITC’s institutional strengths, strong brand equity and goodwill.

The demerger will enable the hotels unit to raise capital from equity and debt markets towards funding its growth requirements as well as attract the right sets of investors, strategic partners and collaborations, whose investment strategies and risk profiles are aligned more sharply with the hospitality industry.

Following the scheme of arrangement, there would be no change in the shareholding pattern of ITC.

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