The endgame may have begun for Paul White, the haughty president & CEO of Orient Express Hotels.
Is it a window of opportunity for Tatas?
MUMBAI: The endgame may have begun for Paul White, the haughty president & CEO of Orient Express Hotels.
On the eve of the annual general meeting of the British hotel chain in New York on Wednesday, two leading shareholders, D E Shaw, a private equity firm, and billionaire Steven Cohen, have joined forces in a strategy to challenge the management.
The fact that the two got together 48 hours before the AGM gives credence to the belief that their plans may not be in sync with those of White & Co.
Shaw and Cohen collectively hold 13% of Orient Express, but only a fifth of their stake comprises voting shares, like all non-promoter shareholders.
The management controls 80% of voting rights through shares that are not listed. But minority shareholders in the US have certain rights which are being used by Shaw and Cohen.
In a filing with the Securities and Exchange Commission (SEC), Cohen and Shaw alluded to their agreement.
According to SEC rules, an understanding of this kind requires Shaw and Cohen to share information with respect to their respective acquisitions of shares of common stock, restrict certain acquisitions and dispositions of shares of common stock, consult with each other prior to making any public statements relating to the issuer and potentially share certain expenses incurred in connection with the transactions contemplated by the letter agreement.
All this makes it a development to be keenly watched for the Tata group, which owns 11.49% stake in Orient Express.
It was not clear if Cohen and Shaw have an understanding with the Tatas, or if this is a proxy takeover gambit by the venerable Mumbai-based group.
“We have no comments to offer,” a spokesperson for the Tatas told DNA Money on Tuesday.
The Tata group is likely to be represented by its lawyers and/or investment bankers at the AGM in New York. The Orient Express management is expected to face some awkward questions at the event, sources said.
Activist-shareholders such as Shaw, which manages $36 billion for its investors, and Cohen are applying pressure to get the management to make quick moves to better their valuations.
The Tatas had sought a partnership with Orient Express late last year. In reply, it got a rude response: “Any association of our luxury brands and properties with your [Tata] brands and properties would result in a reduction in the value of our brands and our business and would likely lead to erosion in the premiums currently achieved by our properties,” said White in the missive.
It was termed by some as even racist. R K Krishna Kumar, vice chairman of Indian
Hotels and Tata Sons board member had responded strongly.
“Those with a fossilised frame of mind risk being marginalised,” he had reparteed.
The next 24 hours will show if Paul White has indeed been marginalised.
j_satish@dnaindia.net
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