New York: Orient-Express, owners of luxury hotels and trains across the world but lately more in news for speculations of Indian takeover attempts, has seen its losses widening by about one-sixth in the first quarter of this year.
The company’s net loss widened to $4.3 million in the January-March quarter of 2008, from $3.7 million in the same period a year ago.
Orient-Express Holdings, where Indian conglomerate Tatas are the second largest shareholder after promoters with a 10.5% stake, sought to downplay the quarterly figures, saying Q1 is “traditionally a loss-making period.”
“Several of its European hotels are closed for most of the quarter and the Venice Simplon-Orient-Express and Royal Scotsman tourist trains and Afloat in France canal cruises do not operate for most of the quarter,” said the company, which most recently hit the news columns for speculations about attracting takeover interest from another Indian firm DLF.
While officials at both OEH and DLF preferred to remain non-committal, reports about a possible bid from Indian realty giant propelled stocks of both the companies late last month.
Stewards await diners on the Orient Express prior to departure from Victoria station in central London. It is impossible for a hostile bid for OEH to go through, as management and promoters hold special voting right shares that can block an offer made without their consent, even if the suitor holds majority of market-traded common shares.
While announcing its Q1 scorecard, OEH said that its revenue rose to $119.9 million, from $97.7 million last year, and net loss from continuing operations shrank to $2.4 million, as against $2.5 million in Q1-2007.
Still, OEH’s shares fell 2.6% to $47.46 yesterday. In Mumbai, shares of Indian Hotels fell by 1.6% to Rs116.15, while those of DLF dropped 0.7% to Rs646.50 in afternoon trade at the BSE.
OEH’s market value has fallen by over one-fourth in less than two months to about $2.6 billion currently. A possible buyout, if it happens, could be at a much higher price because of the company’s strong brand image.
Rumours about DLF mulling a possible acquisition of OEH had followed long-continuing speculations about a takeover attempt by Tata group’s Indian Hotels ever since it disclosed a 10.5% shareholding late last year.
OEH management also rebuffed Tatas’ demand for a business alliance, saying any association with a predominantly Indian brand would dilute its premium brand value. This evoked a strong reaction from Tatas, who sought a public apology for using libellous remarks in the refusal.
It is impossible for a hostile bid for OEH to go through, as management and promoters hold special voting right shares, that can block an offer made without their consent, even if the suitor holds majority of market-traded common shares.
Still, a large number of hedge funds, including those run by renowned investor Steven Cohen, have bought significant stakes in OEH in anticipation of a buyout.
The experts, however, believe it is unlikely that any of the existing shareholders would look to exit the company in the current market conditions.
Those owning over five per cent stakes in OEH are Indian Hotels, certain hedge funds and Dubai Holdings, which had once made an unsuccessful takeover attempt, but most of them had purchased the shares at a level close to 60 dollars.
Notwithstanding speculations about its own takeover, the company has been engaged in activities related to acquisition of various prestigious properties in the recent past.
The company said it has agreed to acquire the 14-room Royal Chundu Lodge in Zambia, situated near Victoria Falls. The site includes a half-mile long island of pristine jungle.
However, decline in corporate customer volume led to sluggish results in Q1 at its ‘21´ Club restaurant in New York, which is one of its most famous properties, OEH said.
OEH has luxury hotels, restaurants, tourist trains and river cruise properties in 25 countries.