ITC Demerger: ITC Hotels To Bag Rs 1,500 Crore Cash At Separation

The hotels arm of ITC Ltd. will receive Rs 1,500 crore in cash and cash equivalent at the time of demerger, the company said on eve of the demerger come into effect on Jan. 1, 2025.

ITC Hotels Ltd. will be demerged from ITC Ltd., with the record date for the company for demerger and the ex-date for the shares of ITC Ltd set at Jan. 6.

To be clear, the shareholders of ITC will get one share of ITC Hotels for every 10 shares they own in the parent. Shareholders should hold shares of ITC on record date i.e. Jan. 6 to be eligible to get shares of the ITC Hotels.

ITC Hotels will file application with stock exchanges for listing its shares and post allotment will be listed by Feb. 14 as per regulatory requirement.

ITC will hold nearly 40% stake in the hotel arm and the remaining will be held by ITC shareholders. It is likely the listing will be well ahead of the deadline as ITC is part of the index and ITC Hotels will continue to be dormant stock in the index till its starts trading.

As part of the scheme of arrangement upon demerger properties, assets, investments, employees, liabilities and contracts forming part of the hotels business will be transferred to ITC Hotels.

In addition, there will be an operating service agreement between ITC and ITC Hotels to operate and manage ITC Grand Central, Mumbai.

The merger will also lead to identified assets such as offices, managerial or staff housing, etc. pertaining to hotels business getting transferred to ITC Hotels. In addition, cash and cash equivalents to the tune of Rs 1,500 crore to cater to planned growth and contingency requirements will also be part of ITC Hotels' balance sheet.

All investments in hospitality entities forming part of hotels business, will be transferred to ITC Hotels. This list includes Bay Islands Hotels Ltd., Fortune Park Hotels Ltd., Landbase India Ltd., Srinivasa Resorts Ltd., WelcomHotels Lanka Pvt. Ltd., Gujarat Hotels Ltd., International Travel House Ltd., and Maharaja Heritage Resorts Ltd.

The financial invetsments in EIH Ltd. and HLV Ltd. and non-operational investments like Logix Developers Pvt. Ltd. will remain with the parent as per the demerger scheme.

ITC Hotels will have zero debt balance sheet and cash generating operations, the company said. The company will invest 8–10% of its revenue in capital investments every year.