Three firms join hands for stake in hotel chain

Mumbai: Within a fortnight of disclosing their stake in the Bermuda-based luxury hotel chain Orient-Express Holdings (OEH), hedge fund entities DE Shaw (7.6 per cent) and Stephen Cohen (5.5 per cent) have joined hands to manage their combined stake in the hotel company.

The hedge funds will now hold 13.1 per cent in the hotel chain. Indian Hotels Company (IHCL) holds 11.5 per cent and Dubai Holdings owns 9.2 per cent.

IHCL had made an offer to the OEH management for a strategic partnership in September last year, which was rebuffed. The stock of OEH has garnered a lot of investor interest since then, although the management firmly denied possibilities of a sale. There were reports that DE Shaw approached the Indian real estate giant DLF for selling its stake in OEH. DLF, though, denied any such move.

DE Shaw had earlier raised objections to OEH's corporate governance structure in a 13D listing. It had raised objections to the rights of the Company's Super Voting Class B shares which are not traded and are held by OEH's subsidiary with 80 per cent of the voting rights.

The partnership will allow Shaw and Cohen to highlight the lack of opportunity for Class A shareholders to hold a definitive and binding vote in case of a merger or sale of OEH.

After disclosing its stake in a 13D filing last month, Cohen reportedly signed an agreement with DE Shaw to share information on buys and sales.

When contacted, the Tatas refused to comment on the move. 'We are invested in the OEH and interested in exploring possibilities to take the matter further. But that is a separate issue,' said Krishna Kumar, vice chairman, IHCL. Besides, there are the memorandum of association and bye-laws with provisions in place that make a third-party acquisition very difficult, without the consent of the company's board.

They also allow the company's board of directors the rights, under Bermuda law, to issue preferred shares without shareholder approval to possibly dilute the share ownership of a potentially hostile acquirer.