Indian Hotels to raise Rs 850 crore from Tata Sons

Indian Hotels Company (IHCL), one of Asia’s biggest hotel chain owners, plans to raise Rs 850 crore by issuing shares and warrants to the promoter company, Tata Sons.

The city-based Tata Group-promoted company intends to use the proceeds arising out of the preferential allotment to retire its debt and strengthen its balance sheet.

The IHCL board today approved the issuance of 36 million equity shares of face value of Re 1 in this financial year to Tata Sons. In addition, 48 million convertible warrants will also be issued to the promoter company.

Each warrant can be converted into one equity share after April 1, 2011, but not later than 18 months from the date of issue. IHCL will make the issue at a price and conditions agreed upon by its board. It will run a postal ballot to obtain the consent of its members, the company said in a release today.

At a standalone level, IHCL’s debt stands at Rs 2,362 crore, while on a consolidated level, it stands at Rs 4,210 crore. The company had already repaid debt of Rs 300 crore during this year, a spokesperson said.

“Capital expenditure this year, including funding of new projects, is around Rs 350 crore. We have adequate liquidity to fund all our projects,” said the spokesperson. After the issuance, the promoters’ holding in IHCL will go up to 37.55 per cent from 30.28 per cent. Tata Sons, the biggest shareholder in IHCL, had a stake of 15.21 per cent, as of September 30.