ITC said it will transfer cash and cash equivalent worth Rs 1,500 crore to ITC Hotels for growth and contingency requirements of the demerged hotel entity, along with assets and trademarks, ahead of January 1, 2025, the effective date of the demerger.
The investor presentation shared on December 30 said ITC Hotels would be cumulatively incurring 8-10% of revenue on capital investments such as renovations and on-going projects, along with new greenfield projects. The demerged entity will also be well-poised to pursue and execute 'selective inorganic opportunities' too, said ITC. The alliances that ITC Hotels would seek would value accretive, said the presentation. ITC Hotels is inheriting a strong zero debt balance sheet and cash generating businesses, which will help in accelerating growth, it added.
Read More: Jefferies foresees strong growth potential for ITC Hotels, value to unlock post listing
The employees engaged in the hotel business will be transferred to ITC Hotels with continuity of service. "Employment terms to be no less favourable than their existing terms of employment with ITC," the presentation added.
Read More: ITC offers over 18% upside, expect buoyancy in hotel demand, agri revival
All the investments in the hospitality entities, forming part of the Hotels Business, are being transferred to ITC Hotels, however, financial investments in EIH and HLV, and non-operational investments (Logix Developers) not being transferred, as proposed in the scheme of demerger.
ITC added that an operating service agreement is being planned with ITC Hotels to operate and manage Mumbai-based ITC Grand Central hotel.
Read More: ITC sets Jan 1, 2025 as effective date for demerger of hotel business
After the demerger, ITC Hotels will issue equity shares directly to shareholders of ITC such that 60% stake will be held directly by shareholders and the remaining 40% stake will continue with ITC. The Record Date has been fixed as January 6, 2025 to determine shareholders of ITC to whom shares of ITC Hotels would be allotted after the demerger.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
