D.E. Shaw asks Orient-Express Hotels to clarify shareholders' rights

By Lisa Kerner

Charlotte, N.C., Feb. 13 - Orient-Express Hotels Ltd. investors led by D.E. Shaw Valence Portfolios LLC expressed concern over the public communications between the company and Indian Hotels Co., Ltd., calling the dialogue "unproductive," according to a Feb. 13 letter from the shareholders to the company's board chairman James B. Hurlock.

The letter was included as part of a schedule 13D filed with the Securities and Exchange Commission.

According the D.E. Shaw, in order to address the cause of the problem, Orient-Express needs to "publicly clarify the rights of the company's super voting class B shares and how the company intends to use these shares in the event a fair and equitable offer for the company as a whole is received."

In addition, the board needs to determine whether or not owners of the company's class A shares will be able to hold "a definitive and binding vote" regarding a merger or sale of Orient-Express.

D.E. Shaw said a lack of clarity on these issues may hinder interested parties from submitting proposals. In addition, it is "creating an unnecessary and significant valuation discount," the letter stated.

The investor noted it would take appropriate action as a shareholder if the company fails to provide "satisfactory clarity on this issue."

In December, Orient-Express turned down Indian Hotels' proposal to explore the synergies of the two companies, despite Indian Hotels' 11.5% stake in Orient-Express.

It was previously reported that Orient-Express rejected a similar proposal from Mumbai-based Indian Hotels in the past, according to a company news release.

Orient-Express president and chief executive officer Paul M. White said he rejected the proposals due to a lack of strategic fit and a possible reduction in value of the Orient-Express brand, a prior SEC filing stated.

In its own SEC filing, Indian Hotels said it believed that Orient-Express has an entrenched board and management that does not meet the needs of its shareholders or "respect the most basic tenets of corporate governance."

Hamilton, Bermuda-based Orient-Express owns and operates deluxe hotels, restaurants, tourist trains and river cruise businesses.

D.E. Shaw and certain of its affiliates beneficially own approximately 5.7% of the outstanding shares of Oriental-Express.

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