The sale of Amanresorts by DLF in March this year was intended to kick-start the company’s growth after it stagnated under its debt.
Recent moves by the company’s new owners, which have included a battle over the CEO role with founder Adrian Zecha, have shown that it is not yet clear sailing at the luxury group.
The current issues stem from the USD358m deal agreed with DLF in February by a joint venture between Omar Amanat and Vladislav Doronin. One month later it was announced after a board meeting that Zecha, who had been expected to stay with the new group, was standing down, to be replaced by Doronin.
The case came to the High Court in London earlier this month, with Zecha denying that he had resigned, although he confirmed that he had discussed stepping down in the evening prior to the meeting.
The High Court made an interim ruling that Doronin had not been “validly appointed as CEO” and that Aman could not take any steps to remove the 81-year-old Zecha as CEO “until 31 July 2014 (or such time as he is replaced by the board of directors if later).”
Amanat said: “I am delighted that Adrian is now back in charge. He will remain in charge until such time a suitable successor can be found. It is essential to me that Adrian retires in a manner of his own choosing, which requires that his loyal staff, who have helped build up Aman into what is, are looked after. The Aman brand and the legacy of Adrian Zecha are and shall forever be inextricably linked.”
A full trial of the case is due in September. Zecha said that he was the subject of “intimidating conduct” during the affair, having been locked out of his office and his home. The judge in London said it was possible the trial would find that Doronin’s company had deployed “strong arm tactics” to take control of the hotels.
Two days after the ruling in London, Doronin filed a lawsuit in New York asking for the court to force Amanat to sell his share of the company. In the complaint filed with the Supreme Court of the State of New York, Doronin alleged that his partner “submitted fraudulent documents” that falsely indicated that Amanat had more than USD100m in liquid assets “in order to induce Doronin to enter into the transactions relating to the Aman acquisition”. The complaint claims that Amanat did not have the funds at the two securities firms he said were holding the money.
Back in London, Amanat said that he was looking to buy out Doronin’s stake and filed his own suit against Aman board member Johan Eliasch, accusing him of conspiring with Doronin “to defraud minority stakeholders in the company”.
HA Perspective [by Chris Bown]: British football (soccer) clubs are often held up as the best examples of dysfunctional businesses, where boardroom battles and ownership of a trophy asset come ahead of profits or caring about customers (in their case, football fans). Right now, Aman’s new owners are running them a close second.
For the good of the brand, it is to be hoped that matters are resolved promptly. The world of luxury hotels is consistently developing and growing, and a management diverted by legal battles will not be concentrating on where Aman Resorts should be going. Adrian Zecha may have been responsible for creating Aman, but it is not realistic to expect an 81 year old to be running a business, without a suitable successor clearly identified and acting in support. That suitable successor is probably not one of two warring co-investors.