Cigarette-to-hotels group ITC Ltd, which acquired 14.98 per cent stake in East India Hotels Ltd, was today non-committal on subscribing to a rights issue of the firm that owns Oberoi group of hotels.
"Let the offer of the rights issue come. The decision will be taken by the board," ITC Chairman Y C Deveshwar told reporters on the sidelines of a CII event here. Last month, EIH Ltd had said it will raise up to Rs 1,300 crore through issue of shares on a rights basis.
Earlier this year, ITC Ltd had increased its stake to 14.98 per cent in EIH Ltd triggering speculation that the FMCG-to-hospitality conglomerate could go for an open offer once it crosses the 15 per cent mark. But in a surprise move in August, Mukesh Ambani-led Reliance Industries bought 14.12 per cent from P R S Oberoi for Rs 1,021 crore.
RIL further hiked its stake to 14.8 per cent. Industry observers saw RIL's buyout as an attempt to thwart a hostile bid from ITC. Deveshwar, however, refused comments on RIL's entry into EIH as a stakeholder. "If ITC will not subscribe to the issue then its shareholding will go down, so the sense is that it will," Elara Capital analyst Himani Singh told PTI.
Another stakeholder in EIH, Max India Chairman Analjit Singh, who currently holds four per cent stake, has said he would subscribe to the issue with an option to exit later. Though the date for the rights issue is not final yet --a committee has been constituted to finalise the ratio, issue price and all procedural modalities -- it is expected to come out in the next one month according to Elara's Singh.