Monday, December 10, 2007

Indian Hotels Raises Stake in Orient-Express (OEH), Seeks Talks; Faber Said Things Heating Up

On CNBC, David Faber highlighted a Friday amended 13D on Orient-Express Hotels Ltd. (NYSE: OEH) showing that The Indian Hotels Company Limited raised its stake in the company to 11.5% (up from 10%) and said it continues to explore opportunities for a possible association between Indian Hotels and the Company. Indian Hotels stated that its proposal will not result in a merger nor affect the independent status of the Company. Indian Hotels said the company has been unresponsive.

Orient-Express, in resisting past overtures from The Indian Hotels and another group, the Dubai Investment Group, has repeatedly stated that its standalone business strategy provided the best long-term value for shareholders.
CNBC's Faber said some investors of Orient-Express have been frustrated that the company has not actively pursued a sale. Faber said things may be heating up.
Interestingly, Steve Cohen's SAC Capital recently disclosed a 5.6% in the company. The stake is "passive", meaning Cohen doesn't have plans to influence the board or management --- of course this can change. Cohen, while not considered an activist investors, has been vocal with a few of his other investments.
Orient-Express owns luxury hotels around the world. Many of the company's properties are considered "prize" hotels.
Copy of Letter:
Dear Mr. Paul White,
We are sorry to have received no reply to the proposal outlined at our meeting on 12th October and subsequently confirmed in our letter of 19th October. The six principal points of this proposal are summarized in the memorandum attached to this letter.
To progress this matter, may we schedule a meeting with yourself and your Board to permit Mr. Tata and myself to discuss this proposal with you, and refine any aspects which are not clear. As you will remember from our meeting, and indeed from our 19th October letter, we agreed to make no further stock purchases until we had a reply as to the suggested meeting, which you indicated would be following your early December Board meeting. As I am sure you will agree, this matter should not be left outstanding indefinitely, so now we look forward to your response, as to when this meeting can be arranged.
With kind regards,
Yours sincerely,
/s/ R.K. Krishna Kumar
1. OEH can bring under its fold IHCL non-Indian or non-Indian-Ocean hotels on terms to be agreed.
2. OEH and IHCL will jointly redevelop the St. James Court site in London to convert it into a super premium luxury hotel and serviced apartments.
3. A joint committee (2 members each) will review and implement potential synergies – materials purchasing; consumables purchasing; cross-marketing; air charter, including our subsidiary Taj Air; ultra-luxury vacation, honeymoon and other packages; IT, where our IT affiliate is home to the world’s fourth largest supercomputer, and shared best practices.
4. A Director of OEH will join the board of IHCL, Director of IHCL will join the Board of OEH.
5. IHCL will purchase further shares in OEH and would welcome OEH as a shareholder in IHCL, both at minority levels to be agreed.
6. OEH will continue as a stand alone public company, with its Board and benefits unchanged.

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