Rebellion spreads at Orient-Express

21 September 2008 - Calcutta Telegraph

Property tycoons David and Simon Reuben have joined a revolt by the shareholders of Orient-Express Hotels, in which the Tata group is a stakeholder, for changing its corporate governance structure.

“If the capital structure is changed, rival groups will be able to bid for the company,” The Sunday Times said, adding that, “two other large shareholders are India’s Tata group and Dubai’s Jumeirah Assets, both of which are reported to be interested in a takeover.”

The Reubens hold a 5 per cent stake in Orient-Express and are backing calls by two hedge funds for a change in the company’s corporate governance structure.

Earlier, the luxury hotel chain operator had come under pressure from two influential hedge funds led by Steven Cohen and DE Shaw to cancel the special anti-takeover voting right shares vested with its promoters.

Claiming that there was no legitimate reason for these shares to be outstanding, the fund houses have asked the company to convene a special shareholder meeting to effect certain changes in its corporate structure.

Cohen-led CR Intrinsic Investments and Shaw-led DE Shaw Valence together hold a 14.3 per cent stake in the company.

Orient-Express has a two-class share system. Class A shares held by the Reubens and other ordinary investors have minimal voting rights, while class B shares, controlled by several members of the Orient-Express board, have super voting rights, giving them the power to stop changes. The demands of the rebelling shareholders will be discussed at a special meeting on October 10.