Orient-Express Hotels investors allege that ownership and voting structure is unlawful

By Lisa Kerner

Charlotte, N.C., Jan. 14 - Orient-Express Hotels Ltd. investors led by D.E. Shaw Oculus Portfolios, LLC and CR Intrinsic Investors, LLC filed a petition in the Supreme Court of Bermuda against the company, subsidiary Orient-Express Holdings 1 Ltd. and members of the company's board of directors, it was reported in a schedule 13D/A filed with the Securities and Exchange Commission.

The petition alleges that Orient-Express' current ownership and voting structure is unlawful under Bermuda law.

According to the investors, the board "exercised its fiduciary powers for an improper purpose by causing or procuring OEH 1 [Orient-Express Holdings 1] to acquire, hold, and/or vote Orient-Express' class B shares."

D.E. Shaw and CR Intrinsic want the court to order the cancelation of the class B shares. The class B shares would then be treated as non-voting "treasury shares" under Bermuda law.

In addition, the investors want Orient-Express Holdings 1 restrained from exercising voting rights with respect to the class B shares, the filing said.

Orient-Express, a Hamilton, Bermuda-based luxury hotel and restaurant operator, said previously that it would vigorously defend any legal challenges to its corporate structure.

Prior to filing the lawsuit, D.E. Shaw and CR Intrinsic proposed a settlement with Orient-Express that included cancellation of the class B shares and implementation of a classified board.

D.E. Shaw also asked for the right to identify a new board director who would lead a committee to evaluate strategic alternatives for the company, a prior SEC filing said.

In return, the investors would agree to a standstill of certain shareholder activities until an appropriate period of time in advance of the 2009 annual general meeting of shareholders.

Orient-Express shareholders declined to pass resolutions proposed by D.E. Shaw and its affiliates in October.

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