NEW DELHI: Proxy advisory firm Institutional Investor Advisory Services (IiAS) has advised shareholders of ITC Ltd to vote against the proposed demerger of the the conglomerate’s hotel business on the grounds that it does not provide complete value unlocking for shareholders.
“IiAS believes the proposed structure, while designed to improve ITC’s ratios, provides neither a complete value unlocking for shareholders, nor any material separation of the hotel business from ITC. It does not reduce the capital support responsibilities of ITC with respect to hotels business. IiAS recommends voting AGAINST the resolution…,” said IiAS in its recommendation note.
Last year in August, the board of ITC approved demerger of its hotels business into a separate entity. Shareholders of ITC will get one share in the soon-to-be-listed hotel entity for every 10 shares they hold in the company.
The hotel business will be listed as a separate entity. The shareholders of ITC will directly hold about 60% of the resulting company, proportionate to their shareholding in ITC; the balance stake of about 40% in the resulting company will be held by ITC.