ITC board approves hotels biz demerger, entitlement ratio 10:1; listing likely in 15 months

ITC on Monday said its board has approved the scheme of arrangement amongst ITC and ITC Hotels and their respective shareholders and creditors under Sections 230 to 232 read with other applicable provisions of the Companies Act, 2013. 

The scheme of demerger is subject to necessary approval from shareholders, creditors, stock exchanges, Sebi, NCLT and
other regulatory authorities, as required. The indicative timeline for listing of ITC Hotels is nearly 15 months. The move will create a separate pure play hotels entity, which will enable crafting the next horizon of growth and sustained value creation for shareholders, ITC said in a BSE filing. The hotels business is proposed to be listed on the BSE Limited and the National Stock Exchange of India, ITC said.

In a BSE filing, ITC said scheme involves the demerger of the demerged undertaking comprising the Hotels business into the resulting company on a going concern basis and in consideration. ITC said the the consequent issuance of equity shares by the resulting company to all the shareholders of the demerged company would be in accordance with the share entitlement ratio i.e. “for every 10 ordinary shares of face and paid-up value of Re 1 each held in the demerged company, one equity share of face and paid-up value of Re 1 in the resulting company.

ITC Hotels will operate as an independent hospitality focused listed entity; it will continue to leverage ITC’s institutional strengths, strong brand equity and goodwill. It will be given a license to use the ‘ITC ’ name as part of its corporate name and some of its properties/brand names, subject to customary conditions. ITC said the intellectual property/trademarks exclusively used in Hotels business will be transferred.

Post the implementation of the Scheme, the shareholders of ITC will directly hold about 60 per cent in the resulting company, proportionate to their shareholding in ITC; the balance stake of about 40 per cent in the resulting company will be held by ITC.

Overall, the shareholders of ITC will hold 100 per cent of the ultimate beneficial economic interest in the Hotels business (direct holding of about 60 per cent and indirect holding of about 40 per cent through ITC).