Shareholders grill OE board

Two influential shareholders of luxury hotels chain operator Orient-Express Hotel (OEH) have called for a meeting of investors to question the legal standing of anti-takeover corporate structure adopted by the company.

The call for the meeting, by hedge funds headed by Mr D.E. Shaw and Mr Steven Cohen who together hold close to 14 per cent stake in OEH, comes in the midst of the company on Wednesday posting a better-than-expected second quarter results. OEH, last year rebuffed an alliance proposal from Indian conglomerate Tata group’s Indian Hotels, which owns a 11.5 per cent stake in the company. However, these class A shares held by Indian Hotels and the hedge funds hold little voting rights, most of which resides with the company’s Bermuda-based promoters.

D.E. Shaw & Co headed by Mr David Shaw and CR Intrinsic Investors headed by Mr Steven Cohen said in a letter addressed to the OEH board that the company’s corporate governance structure should be revised as it might not survive if challenged in the court.

While noting that the company’s shares have fallen by close to 50 per cent in about 8-9 months, the two investors said in separate regulatory filings here that the objections to OEH’s corporate governance structure was also raised at the company’s latest AGM.

The investors had re-asserted their objections in a letter written to the OEH board on July 24, for which they had sought a reply by August 1.