NH Hotel Group entered into a new management contract with Hesperia, prompting its largest shareholder, HNA Group, to reiterate its call for NH Hotel to appoint a new chairman and find a "qualified" CEO.
In an open letter to fellow shareholders, the Chinese conglomerate said the "sweetheart contract" with Hesperia, which together with Oceanwood took control of the NH Hotel board in June, had certain provisions that do not "provide NH Hotel's non-Hesperia shareholders with adequate protections."
Former NH Hotel CEO Federico Gonzalez had previously tried to negotiate a management contract with Hesperia owner Jose Antonio Castro for a €24 million capital investment in exchange for NH Hotel's management of 28 Hesperia hotels. That deal was not realized as Castro "repeatedly" disagreed with the contractual terms, but with the disclosure of the new management contract, HNA believes that NH Hotel nonexecutive Chairman Alfredo Fernandez struck an agreement that serves the interests of Castro.
HNA advised NH Hotel to conduct an independent third-party review of the deal, deliver a fairness opinion to NH Hotel shareholders excluding Hesperia and Oceanwood, and remove terms that only benefit Castro, according to the letter.
It further noted that resolving the corporate governance issues at NH Hotel marks the first step for the "process of reconciling the interests" of HNA and non-HNA shareholders.
Previously, HNA had also claimed that Hesperia and Oceanwood had placed their own executives in NH Hotel's board in an attempt to clinch control of the hotel group's operations and management.