ITC Hotels Demerger: Rs 1,500 crore to be transferred to ITC for growth & contingency requirements

Demerger of ITC's Hotel Business would come into effect from January 1, 2025, and the record date for shareholders will be January 6, 2025.

As per the scheme, ITC Hotel will be separated from the parent entity, according to a regulatory filing from the Kolkata-based conglomerate.

As per the demerger scheme, ITC shareholders whose names will appear in the list of shareholders on January 6 will receive "one share of ITC Hotels for every 10 shares of ITC".

ITC Hotels will issue equity shares directly to the shareholders of ITC in a manner that about 60 per cent stake is held directly by ITC shareholders proportionate to their shareholding in ITC and the remaining about 40 per cent stake will continue with ITC.

"Overall, existing ITC shareholders will hold 100 per cent of ITC Hotels, i.E. About 60 per cent directly and a balance of about 40 per cent through their shareholding in ITC," it said.

Moreover, ITC will transfer "cash & cash equivalents of Rs 1,500 crore" to the demerged entity "to cater to planned growth & contingency requirements," said ITC in an investor presentation shared on Monday to bourses.

All conditions specified for the Scheme have been satisfied and ITC Hotels will file an application with Stock Exchanges/ SEBI for listing its shares, post allotment.

"Shares to be listed within 60 days from date of receipt of NCLT Order as per SEBI Master Circular dated June 20, 2023," it said.

The Kolkata bench of the National Company Law Tribunal (NCLT) had on December 16, 2024, approved the scheme.

"Appointed Date and Effective Date of the Scheme to be January 1, 2025" and "Record Date fixed as January 6, 2025 for purposes of determining the shareholders of ITC to whom equity shares of ITC Hotels would be allotted pursuant to demerger," it added.

ITC and ITC Hotels will also execute a 'Trademarks License Agreement' under which ITC Hotels would be given a license to use the ITC trademark along with any copyrights as ‘Bukhara', ‘Dum Pukht' & ‘Dakshin' trademarks.

Moreover, an operating Service Agreement will be executed between ITC and ITC Hotels to operate and manage 'ITC Grand Central, Mumbai'.

Besides identified assets such as offices, managerial/ staff housing, etc pertaining to hotel business being transferred to ITC Hotels, it added.

Along with investments in Hospitality Entities such as Bay Islands Hotels, Fortune Park Hotels, Landbase India, Srinivasa Resorts, WelcomHotels Lanka, Gujarat Hotels, International Travel House, Maharaja Heritage Resorts Ltd - forming part of Hotels Business, are being transferred to ITC Hotels.

However financial Investments in acrival hospitality chains Oberoi and Leela are not being transferred.

The new entity will be with 'Zero Debt Balance Sheet" and generate cash to accelerate growth. It is also well positioned to execute "selective Inorganic Opportunities", it added.

ITC Hotels is a leading chain with over 140 hotels in 90 destinations with six distinct brands.