Lemon Tree Hotels Ltd’s wholly owned subsidiary Carnation Hotels Pvt Ltd has entered into a Joint Venture Agreement with RJ Corp Ltd for the development and execution of the Aurika Shillong project through Arum Hotels Pvt Ltd.
Arum is the special purpose vehicle formed for the project and is currently a step-down wholly owned subsidiary of Lemon Tree Hotels.
RJ Corp to acquire 49% stake
Under the agreement, RJ Corp will acquire a 49% stake in Arum by subscribing to a fresh issue of equity shares.
Carnation Hotels will hold the remaining 51% stake in Arum.
Arum will issue 47.65 lakh equity shares of ₹10 each to RJ Corp.
The shares will be subscribed by RJ Corp within seven days from the effective date of the agreement.
Fresh issue, no stake sale
The transaction does not involve any sale or transfer of shares by Carnation Hotels.
As the stake will be created through a fresh issue of equity shares by Arum, Carnation will not receive any consideration.
Following completion of the transaction, Arum will cease to be a step-down wholly owned subsidiary of Lemon Tree Hotels.
It will, however, continue as a step-down subsidiary of the company.
Equal board representation
Carnation Hotels and RJ Corp will always have an equal number of directors on the board of Arum.
The joint venture structure will govern the development and execution of the Aurika Shillong project.
RJ Corp has diversified interests
RJ Corp is an unlisted public company engaged in several businesses, either directly or through its subsidiaries and associate companies.
Its interests include beverages, dairy, quick service restaurants, retail, ice cream and healthcare.