EIH says rights issue to raise Rs 1,178 cr

Hospitality firm EIH, which operates the Oberoi and Trident brands of hotels and resorts, today issued a clarification on its rights issue kicking off next month, indicating that it will raise Rs 1,178.86 crore through the issue of shares at a price of Rs 66 apiece.

In a clarification to the Bombay Stock Exchange (BSE), the company said: "The issue price of the equity shares being offered in the rights issue was inadvertently mentioned as Rs 65 equity share including a premium of Rs 63 per equity share."

"The rights issue committee has approved the issue price of Rs 66 per equity share, including a premium of Rs 64 per equity share and the consequent increase in the amount being raised in the rights issue to Rs 1,178 crore," the statement said.

On February 11, the company had said that it will issue 17.86 crore equity shares (at a share price of Rs 65) on a rights basis to its existing shareholders, "aggregating to approximately Rs 1,161 crore".

"All other terms of the issue as per intimation letter, including rights entitlements and record date remain unchanged," the latest filing added.

The company had said five equity shares will be issued for every 11 equity shares held by shareholders on the record date of February 22.

According to experts, the rights issue will give the existing investors a good opportunity to invest in a strong company like EIH.

A rights issue is an additional issue of shares by a company to existing shareholders with the objective of raising fresh funds for financing future growth.

The EIH issue, which opens on March 1 and closes on March 15, has been closely followed by market watchers, as rival ITC and Reliance Industries (RIL) are on the verge of exceeding the open offer threshold of a 15% stake in the hospitality major.

It is not clear yet if RIL and ITC will subscribe to the issue, as both companies declined comment on the matter. Another significant shareholder, Max India Chairman Analjit Singh, who currently holds a 4% stake in EIH, also declined to comment on the prospects for his participation in the issue.

In August last year, RIL had surprised the hospitality world by picking up a 14.8% stake in EIH.

As per industry observers, EIH Chairman P R S Oberoi wanted strong associations to thwart any possible hostile bid from ITC and accordingly approached RIL for the purchase of a stake.

EIH's scrip was being quoted at Rs 103.85 per share on the Bombay Stock Exchange, up 2.01% from the previous close.