Wednesday , May 18 2022

Coffee day for selling an IT park in Bengaluru to reduce the debt burden



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Mumbai / Bengaluru: Just over a week after the death of Café Day founder V.G. Siddhartha, board of Coffee Day Enterprises Ltd (CDEL), the holding company of the Coffee Day group, decided on Thursday to sell the 90-acre technology park in Bengaluru to reduce the debt burden on CDEL.

Two people who are directly familiar with the discussions on the CDEL board confirmed this, adding that New York-based private equity giant Blackstone Group is one of the top bidders to buy Tanglin Developments Ltd's Global Village Park, CDEL unit.

Blackstone resumed talks over the acquisition of Tanglin Developments last week, saying two separate people were directly familiar with the deal on condition of anonymity. A spokesman for Blackstone declined comment.

The CDEL board met Thursday to discuss three key issues – the potential sale of assets to the Coffee Day group to pay off debt; ways to ensure the smooth continuation of CDEL's business after Siddhartha's death; and appoint a forensic firm to verify the veracity of the letter, which was allegedly written by Siddhart before his untimely death on July 29.

The board meeting was initially scheduled to take into account CDEL's financial results for the quarter in June. However, on August 2, CDEL stated that due to certain unavoidable circumstances, the board would not consider the financial results for the quarter ended June 30 at the board meeting on August 8.

"The announcement of the financial results will be delayed further. The board will soon announce a new date, "said one of the two, initially quoted.

The fourth move on board is a little unexplained in light of Siddharth, who is delaying his initial plans to sell the technology park after the successful sale of his 20.32% holding in Mindtree to engineering conglomerate Larsen and Toubro Ltd for 3200 crore.

Following the board meeting, CDEL appointed EY to investigate the circumstances leading to the statements made in the letter allegedly written by Siddhartha and to examine in detail the accounting records of the company and its subsidiaries, registered by the company.

CDEL stated that to ensure that the company continues to have a strategic direction and a suitable path forward, a celebrity or renowned company will soon be appointed as a strategic corporate advisor.

Malavika Hegde, Siddharth's widow, has been appointed as an additional member of the executive committee formed by CDEL on July 31 to fulfill executive-level responsibilities and "explore options to eliminate the Coffee Day Group".

Mint first announced on August 1 that CDEL plans to selectively sell assets to a Siddhartha-based company to pay off debt arising from the group's 52 units.

"The board has approved in principle the sale of an IT park in Bangalore. Blackstone could be one of the potential buyers. The council is in favor of monetizing the assets of CDEL and its subsidiaries, which will begin with the sale of the IT park, "the first person said after Thursday's board meeting.

On March 31, CDEL – whose main subsidiaries include Coffee Day Global Ltd (coffee business), Sical Logistics Ltd (integrated logistics), Tanglin Developments Ltd (real estate), Way2Wealth (financial services) and Coffee Day Hotels and Resorts Ltd (hospitality) ) – there are at least debt obligations 7 653 crores.

The consolidated loans of all CDEL subsidiaries together (bank loans and NCD) worked 6477.38 kroons as of March 31, of which short-term debt was outstanding 1,106 crore. Separately, CDEL loans were only around 350 crore, while the subsidiary Coffee Day Global itself had debt 879.67 kroons as of March 31, according to the balance sheet submitted by the company. CDEL's total assets were worth about 11,259 crore.

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