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| Court restrains EIH from converting debt into equity |
| Baldev S Chauhan / Shimla Sep 12, 2010, 00:13 IST |
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The Himachal Pradesh High Court today restrained the East India Hotels (EIH), a part of the Oberoi Group, from converting the Rs 100-crore debt in its Wildflower Hall hotel into equity.
The counsel for the Oberois told the court that the Wildflower Hall hotel in Shimla has been incurring losses for several years and the loss was being made up by borrowing unsecured loans from the promoter company.
He said the total unsecured loans had risen to Rs 100 crore to clear its balance sheet. EIH wanted to convert this loan into equity, but added that the conversion cannot take place until the five-year old petition of the state government challenging the arbitration award was not settled.
The Wildflower Hall hotel, located 15 km from Shimla, was initially run by the state government. After it was destroyed in a fire in 1992, it was rebulit in 1995 by a joint venture formed by the Oberois and the Himachal government.
The state government’s counsel, who filed the petition seeking the restraining order, pointed that the hotel had been built in a joint venture fifteen years ago, with 35 per cent equity of the state government.This was reduced to 21 per cent in 2003.
The arbitration had sought to do away with the joint venture and hand over the ownership to EIH after buying the government shareholding.
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