Private equity firm Blackstone Group LLP's plan to buy the technology park owned by debt-laden Cafe Coffee Day has hit a major roadblock after a lender flashed the red signal to the deal, said news reports.
The crisis-hit Cace Coffee Day (CCD) Group's plans to sell its Global Village Technology Park to Blackstone Group hit a hurdle after the coffee venture's largest creditor Yes Bank reportedly did not give its nod to the Rs 2,800-crore deal, according to a report in Mint.
The deal got stalled after Yes Bank reportedly put up a condition that “no objection" would be given to the deal only if Coffee Day is ready to repay the entire loan taken by the group from Yes Bank or at least the loans taken by Coffee Day’s arms- Tanglin Developments (which owns the tech park) and Sical Logistics, the report said, quoting people in the know of the matter.
Last month, private equity firms KKR, TPG Capital and Bain Capital had approached Coffee Day Enterprises (CDEL), the parent firm of CCD, expressing interest to buy a significant stake in the group’s coffee business, said a report in The Economic Times.
The Dutch agro commodity, shipping and finance firm Louis Dreyfus Company BV may also join the race, the report said.
In order to pay off its debts and to run major businesses of the company in a smooth manner, the board of the company in August directed the management to explore opportunities to deleverage the company and its subsidiaries.
Last month, Sical Logistics, which CCD had bought in September 2011, had sought shareholders' nod to sell, dispose of or hive off multiple business undertakings to pare debt. Sical Logistics has an external debt of Rs 1,488 crore, secured by the personal guarantees of late Coffee Day Group promoter V G Siddhartha.
Tanglin Developments, the wonder of the park, owes Rs 100 crore to Yes Bank, while Sical Logistics owes Rs 50 crore, the report said.
“Yes Bank has insisted that Coffee Day Group should ideally use the money from the first tranche of the Blackstone deal (Rs 2,000 crore) to pay off the group’s dues to Yes Bank rather than paying the lenders on a pro rata basis,” a source told the publication.
The CCD group’s debt was reported at Rs 7,100 crore in April 2019 but it had come down to Rs 4,980 crore after the sale of a 20.41 percent stake in Mindtree to engineering and construction conglomerate Larsen and Toubro in May this year.
In July this year, Coffee Day Group promoter Siddhartha was found dead in Netravati river near Mangaluru in Karnataka two days after he had gone missing.
In a letter purportedly written by him, Siddhartha mentioned severe financial stress being faced by his group firms, among other issues.
In August this year, the board of directors of CDEL had approved the sale of Global Village Technology Park-spread over 90 acres near Bengaluru, to Blackstone for up to Rs 3,000 crore. The purpose behind the sale was to repay the debts of CCD's associate firms and their promoters.
On 17 August, Coffee Day Enterprises had claimed its total debt might reduce to around Rs 1,000 crore after adjusting the proceeds from the sale of its Global Village Tech Park to Blackstone.
— With PTI inputs
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Updated Date: Dec 10, 2019 15:04:18 IST