Leela-Brookfield deal: SAT dismisses ITC plea

The Securities Appellate Tribunal (SAT) on Thursday dismissed an application by ITC in relation to Hotel Leelaventure’s assets sale to Brookfield. The tobacco-to-hotel conglomerate’s plea had challenged a July 2019 order by the Securities and Exchange Board of India. The order had rejected ITC’s contention that the proposed asset sale to Brookfield qualified as a related-party transaction, except in respect to proposed transfer of ‘Jamavar’ trademark to Brookfield. ITC is going to challenge the SAT’s decision in the Supreme Court on Friday. Consequently, the SAT also vacated its stay on Hotel Leela declaring the final outcome of the postal ballot resolutions seeking shareholders’ approval for sale of assets to Brookfield Asset Management until the tribunal delivers its order on the matter. Hours after the order, Hotel Leela posted results of the postal ballot on the exchanges. As per the documents, the company received 89.13% approval from shareholders on votes polled on all resolutions. The tribunal further rejected ITC’s oral plea for two-week time to appeal against the decision in the Supreme Court on the basis of merit. ITC challenged Sebi’s order that had allowed Hotel Leela to conduct a fresh postal ballot on the proposed transaction with Brookfield, but called for the company to provide all relevant details with respect to the transaction, along with additional disclosures on valuation and additional intellectual property transaction. The Sebi order was following an investigation in response to representations from ITC, which had at that point already moved the National Company Law Tribunal against Hotel Leela, alleging “oppression and mismanagement”. Sebi also received a representation from minority shareholder Life Insurance Corporation (LIC) on the issue. ITC holds 7.92% in Hotel Leela. LIC of India Future plus Growth Fund holds 2.36% stake in the company. On March 18, Hotel Leela had announced sale of its four hotels in Bengaluru, Chennai, Delhi and Udaipur, as well as another property to Brookfield for `3,9500000000.—FE