Orient Express unmoved by IHCL overtures

The multi-crore investments by Tata Group-owned Indian Hotels Company (IHCL) in Bermuda-based Orient Express Hotels (OEH) appear to be stuck in limbo.

The New York Stock Exchange (NYSE)-listed OEH, which has a collection of luxury hotels, resorts, restaurants and trains, has continuously ignored the advances made by IHCL to have any strategic partnership, even as the Indian company’s stake in it has suffered a setback over last three years.

IHCL’s stake in OEH have reduced to 7.9 per cent from 11.5 per cent in December 2007, following its decision to skip the rights issue launched by the latter earlier this year.

Senior management at IHCL said the company was still trying to hold talks with OEH to explore the possibility of synergies in expansion, although it hadn’t achieve any major breakthrough till now.

IHCL Managing Director Raymond Bickson said, “We always talk to Orient Express. We have spoken to them before, we are speaking to them now, it’s a friendly competition.”

When asked if IHCL will look to continue with talks, despite no positive overtures from the OEH side, Raymond said, “What would we do? The market is down, the share price is 50 per cent less than they were, nothing will happen for anybody.”

“With over 70 per cent erosion in its holding, IHCL is unable to decide on its future course of action as regards to its stake in OEH,” said a city-based analyst.

IHCL had bought a 10 per cent stake (4,247,844 Class A shares) in Orient Express in September 2007 and subsequently raised it to 11.5 per cent, its highest level, in December 2007 through further acquisition of Class A shares.

With OEH refusing to have any association with IHCL and the latter’s subsequent erosion of stake in the former, industry experts and analysts believe the investment is reduced to being just financial rather than strategic. IHCL has so far invested $247 million (' 1,000 crore) in buying shares of Orient Express. According to OEH’s last trading price on NYSE, $9.64 a share on Thursday, IHCL’s value of holding in OEH has eroded to $68.74 million (' 320 crore).