INDIAN Hotels, owner of the Taj Group of hotels, has bought 2.25 million shares of the New York-listed Orient Express Hotels at $5.75 a share, in a market transaction totalling $12.93 million (about Rs 64.65 crore).
In a statement to the Securities Exchange Commission, Indian Hotels said its subsidiary Samsara Properties raised a $51 million loan from the UK branch of ICICI Bank, to part fund the share purchase. Orient Express Hotels owns several luxury resorts, tourist trains and cruises. The interest on the ICICI loan will accrue on a daily basis at a rate of Libor plus 4% per annum, said the Indian Hotels statement. According to people close to the development, the Tatas will fund the remaining amount through internal accruals. Indian Hotels officials declined to comment on the development. An e-mail query sent to Anil Goel, executive director of Indian Hotels, went unanswered.
It is also widely speculated that the Tatas may buy more Orient Express stock, these sources added. Over the past several months, senior representatives of Indian Hotels have met with OEH senior representatives to discuss the latter's ongoing liquidity and capital needs.
The additional share purchase at below $6 will help Indian Hotels to pare the overall cost of buying into OEH.
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