On Monday, the ITC board granted its approval to a proposed arrangement that entails the separation of its hospitality business. According to this scheme, ITC shareholders will be issued 1 share of ITC Hotels for every 10 shares they currently hold in ITC.
Following the execution of the scheme, ITC shareholders will possess approximately 60 percent ownership in ITC Hotels, aligning with their existing holdings in ITC. The remaining ownership stake, accounting for roughly 40 percent in the newly established entity, will be retained by ITC itself, as previously disclosed by the company.
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ITC has outlined a 15-month timeframe for the listing of ITC Hotels. The demerger scheme is contingent upon obtaining multiple regulatory clearances, which encompass approval from stock exchanges, the Securities and Exchange Board of India (SEBI), and the National Company Law Tribunal (NCLT).
As outlined in its investor presentation submitted to the stock exchanges, the company clarified that the share entitlement ratio is determined by the share capital of both entities. This ratio is independent of the market capitalization of ITC Hotels and solely influences the per-share price.
In accordance with the agreement, ITC Hotels will be granted a license to incorporate the ‘ITC’ prefix within its corporate title and also within certain property and brand names, subject to an appropriate fee.
Trademarks that are utilized collaboratively by ITC’s diverse enterprises and its hotels division will be licensed to ITC Hotels under terms that are mutually agreed upon.
Employees associated with or connected to the hotels business will be transitioned to ITC Hotels, with the company assuring that their employment terms will be upheld at a level no less advantageous than their current terms of employment within the company.
Nevertheless, financial holdings such as East India Hotels Ltd (EIH Ltd) and Hotel Leelaventure Ltd (HLV Ltd), as well as non-operational entities like Logix Developers, will remain excluded from the transfer process.