Coffee Day Enterprises seeking lenders nod for tech park sale to Blackstone

Coffee Day Enterprises is seeking its lenders's nod for the completion of the deal to sell Bengaluru-based Global Village Tech Park to global investment firm Blackstone and realty firm Salarpuria Sattva at an enterprise value of Rs 2,700 crore, the company said on Wednesday.
Terming the report suggesting roadblocks from some bankers as "bruits", Coffee Day Enterprises said that it along with its subsidiary Tanglin Developments is working on that.

"We wish to inform that the Company and Tanglin Developments Ltd, the subsidiary of the Company, is in the process of obtaining required NOCs from the lenders for the completion of the deal," the company said in a regulatory filing.
On September 17, 2019, Coffee Day Enterprises Ltd (CDEL) had announced about the deal as part of its move to pare its debt, which is nearly Rs 5,000 crore.
CDEL has been trying to divest its assets to pare debt after the death of its promoter V G Siddhartha.
Besides Global Tech Park, the Coffee Day Group, is also looking to reduce debt of Sical Logistics, which runs port terminals and container freight stations.
CDEL had said that the company has sold the tech park to focus on its core business and reduce the debt of Coffee Day Group.
Coffee Day Enterprises shares on Wednesday settled at Rs 41.70, down 0.24 per cent from the previous close.

Coffee Day gets Registrar of Companies approval to extend AGM by 45 days

Coffee Day Enterprises Ltd (CDEL) has received regulatory approval for extending its annual general meeting (AGM) by 45 days from Registrar of Companies (RoC), the company said in an exchange filing.
According to Companies Act, every company must hold its AGM within six months from the closing date of financial year, which ends on September 30. So, CDEL will now have 45 days more time to hold its AGM post this deadline.

"The company got approval from RoC, Bengaluru for extension of AGM for the financial year ended March 31, 2019 which is due to be held on or before September 30, 2019 as per the requirement of Section 96 of Companies Act, 2013, for another period of 45 days," it said.

Earlier, the Bengaluru-based firm has also informed stock exchanges regarding delay in announcement of its quarterly results after the demise of its chairman VG Siddhartha.
Towards the middle of this month, the conglomerate with interests in coffee to IT services, has appealed its lenders and creditors to give it sufficient time to honour its repayment obligations. Putting its debt liability at Rs 4,970 crore, the company has asserted that its deleveraging efforts would ensure timely repayment to creditors. Especially, its move to divest the Global Village Tech Park is likely to reduce the group’s total debt significantly to around Rs 2,400 crore, it had said. Currently, private equity major Blackstone is doing the due diligence for buying out the tech park at a valuation ranging from Rs 2,600 crore to Rs 3,000 crore.
CDEL's share price has recovered around 34 per cent since August 16 to close at Rs 83.75 per share at BSE on Wednesday after losing more than 65 per cent from July last week of this year.

Coffee Day seeks more time from creditors to repay Rs 4,970-crore debt

Coffee Day Enterprises (CDEL) has appealed to its lenders and creditors to give it sufficient time to honour its repayment obligations.
In a regulatory filing on Saturday, the Bengaluru-based company also said its recent move to divest Global Village Tech Park would reduce the group’s total debt significantly to around Rs 2,400 crore, from Rs 4,970 crore at the end of July.
The overall debt will come down to around Rs 1,000 crore if the financial liabilities of Sical Logistics (another listed company from its stable) and that of Magnasoft Consulting, the privately-held IT services firm, are not included.

ALSO READ: Coffee Day Group's Sical Logistics seeks one-time moratorium from lenders
“The company is confident that ongoing divestments will significantly reduce the debt position of the Coffee Day group. The financial position and asset base of the group will be comfortable to service debt obligations of the entire group,” CDEL said in a filing to the stock exchanges. “We reiterate that the debt obligations of the Coffee Day group will be honoured. We request all the lenders and creditors to give us sufficient time to honour the commitments and unlock the true potential value of the assets.”
In a separate filing, Chennai-based Sical Logistics said it had sought a one-time moratorium of three months, starting August, from its lenders for servicing debt, which stood at Rs 1,488 crore by the end of July.
Coffee Day seeks more time from creditors to repay Rs 4,970-crore debt
“The company would utilise the available internal resources to augment the existing cash flows to cater to the needs of the business verticals,” the Chennai-based logistics firm said.
After the demise of Coffee Day founder V G Siddhartha last month, this is the first time the group gave a clear picture of its overall debt position.
According to the group, its subsidiaries Tanglin Developments, which is into tech park development, and Sical Logistics carried the most amount of debt in their books till July this year.
ALSO READ: Blackstone to acquire Coffee Day's tech park for Rs 3,000 cr: Report
Tanglin Developments’ debt was Rs 1,622 crore, and its flagship coffee retailing arm, Coffee Day Global’s total debt stood at Rs 1,097 crore.
Similarly, Coffee Day Enterprises owed Rs 480 crore to its creditors while its financial services wing, Way 2 Wealth Securities, had total obligations of Rs 121 crore. The group’s hospitality wing Coffee Day Hotels and Resorts had a debt of Rs 137 crore.
Overall, the Coffee Day Group’s total debt stood at Rs 4,970 crore of which Rs 4,796 crore was classified as secured loan. The remaining Rs 174 crore was unsecured loan.
Sources said disclosure of its debt position is likely to help the firm get back shareholders’ confidence. Market participants were wary about the group’s financial health as Siddhartha’s purported letter had hinted at some financial transactions beyond the knowledge of the board, auditors and close family members.
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During the last board meeting held on Wednesday, CDEL had disclosed its plan to sell Global Village Tech Park, one of its prized assets, to Blackstone for a valuation ranging from Rs 2,600 crore to Rs 3,000 crore, as part of the deleveraging measure.
Sources also said the group could look at monetising its stake in Coffee Day Hotels & Resorts, Sical Logistics and Magnasoft to reduce debt further.

Coffee Day Group's Sical Logistics seeks one-time moratorium from lenders

Sical Logistics Ltd, a part of the Coffee Day Group, asked its lenders to provide a one-time moratorium of three months from servicing their debts. The company said that it is planning to deleverage the company and its subsidiaries in line with the observations made by its holding company Coffee Day Enterprises Ltd, after the demise of its promoter V G Siddhartha.
Sical told the National Stock Exchange that it would utilise the available internal resources to augment the existing cashflows to cater to the needs of business verticals and that it had asked lenders for a moratorium from August 2019 to October 2019 from servicing their debts.

According to a disclosure made by Coffee Day Enterprises, of the Rs 4,796 crore of secured loans, around Rs 1,488 crore belong to Sical Logistics Ltd (consolidated).
Sical has been working on the divestment of certain assets and the proceeds from divestment are expected to significantly reduce the company's debt.
While Tanglin Retail Reality Developments Pvt Ltd, a part of the Coffee Day Group, has a 50.19 per cent stake in the logistics and supply chain solutions company, Giri Vidyuth (India) Ltd holds a 4.99 per cent stake. The late V G Siddhartha, its promoter, personally held 0.68 per cent stake in the company. However, the entire 4,00,000 shares held by Siddhartha and almost 95.32 per cent of the stake of Tanglin Retail in Sical Logistics is pledged or otherwise encumbered according to a company filing.
The Coffee Day Group acquired majority stake in Sical from the previous promoters, the M A Chidambaram Group, in September 2011. The company is an integrated logistics solution provider for bulk and containerised cargo in the country, and has interests in mining, port logistics, road and rail transport, container freight station, warehousing and shipping among others.
The net profit of the company, on a consolidated basis, for the quarter ended June 30, 2019, grew by 23.5 per cent to Rs 2.79 crore as compared to Rs 2.26 crore during the same quarter last year. The total income grew over 12 per cent to Rs 365.32 crore during the quarter, as against Rs 324.78 crore in the corresponding period of the last fiscal.

Coffee Day to sell Global Village Tech Park to Blackstone for Rs 3,000 cr

Coffee Day Enterprises (CDEL) on Wednesday announced its intent to sell one of its prized assets, Global Village Tech Park, to private equity major Blackstone for a valuation ranging between Rs 2,600 crore and Rs 3,000 crore.
The deal is expected to substantially reduce the overall debt burden of the group, which stands at around Rs 5,200 crore after the payment of Mindtree’s sale proceeds of Rs 2,100 crore net of taxes. The Bengaluru-based firm said a “non-binding letter of intent” to this effect had been signed with Blackstone. “The transaction closure is subject to completion of Blackstone’s due diligence, documentation and receipt of requisite regulatory approvals, which is expected in the next 30-45 days,” the firm, which runs the Café Coffee Day outlets, said in an exchange filing.

The move comes a fortnight after the death of Café Coffee Day founder V G Siddhartha, whose purported last letter had talked about “a serious liquidity crunch” faced by the company.
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Owned by CDEL’s subsidiary Tanglin Developments, Global Village Tech Park is spread over 91 acres with a built-up area of around 4 million square feet (sq ft) and a scope for building another 5 million sq ft of office space. The IT park, located off Mysore Road on the outskirts of the city, houses marquee tenants like Accenture and Mindtree and fetches a rental income of around Rs 250 crore a year. The company is said to have engaged with Blackstone for a sale when Siddhartha was at the helm.
However, the discussions had stalled owing to differences over valuation. In his 'last letter', Siddhartha mentioned the valuation of the asset at Rs 3,600 crore.
"The (current) valuation is fairly okay. The earlier valuation, as mentioned in Siddhartha's purported letter, was based on the assumption that the remaining land parcels can be used for construction which can fetch a higher valuation," a source in the know said.
Blackstone declined to offer any comment on the development.
However, sources said the tech park would be jointly owned by Blackstone and Bengaluru-headquartered realty firm Salarpuria Sattva Group. "Salarpuria Sattva and Blackstone are likely to form a special purpose vehicle (SPV) for this property, which will be finalised in a meeting towards the end of this week," another source said.
ALSO READ: Cafe Coffee Day, V G Siddhartha lenders staring at legal quagmire
Blackstone and Salarpuria Sattva already have a joint venture with a real estate portfolio of 16 million sq ft, though most of these assets are in Hyderabad. The combined entity is said to be looking to buy properties in Bengaluru to expand its current portfolio.
An early closure of the deal with Blackstone is critical for CDEL, whose share price has fallen by around 65 per cent after the demise of Siddhartha. The company's market capitalisation has fallen from a peak of Rs 7,000 crore to around Rs 1,400 crore now.
Wednesday's board meet, which was attended by Malavika Hegde, wife of Siddhartha, also decided to sell one the company's subsidiaries, AlphaGrep Securities, to Mumbai-based Illuminati Software for Rs 28 crore. AlphaGrep, which is involved in algo-trading, was formed as a joint venture between the Coffee Day group and Illuminati Software, in which the former held a majority stake. The company is said to be running in losses.
ALSO READ: Business failures shouldn't be a taboo: Sitharaman on CCD founder's death
Industry experts said that while the decision of CDEL to monetise assets for reducing debt was a timely move, there was no clarity yet on the gross liability of all group companies put together.
More assets to be on the block
Coffee Day Enterprises is learnt to have lined up a few more strategic assets for monetisation to reduce its debt to a manageable level.
The next in line could be a few of the resorts owned by Coffee Day Hotels & Resorts, and Sical Logistics, a listed entity in which the group owns over 51 per cent stake, sources said. The firm is looking at divesting its stake in Magnasoft, an IT services firm.
“The board is looking at simultaneously pursuing all these options to bring down the debt to a manageable level and instill confidence among employees and investors,” a source said.

V G Siddhartha's death: Wrong to project us as villains, say PE leaders

Private equity (PE) funds, in the spotlight after the death of Coffee Café Day founder V G Siddhartha, have sought to dispel speculation about any wrongdoing in their funding methods.
They say the notion that PE investors leverage bait-and-switch to lure promoters and entrepreneurs into lose-lose situations through debt products is misleading. A letter purportedly written by Siddhartha days before his death said: “I fought for a long time but today I gave up as I could not take any more pressure from one of the PE partners forcing me to buy back shares.” He had also ...

Business failures shouldn't be a taboo: Sitharaman on CCD founder's death

Reacting to the death of Cafe Coffee Day founder V G Siddhartha, Finance Minister Nirmala Sitharaman on Thursday said business failures in the country should not be tabooed, or looked down upon.
Responding to the debate on the Insolvency and Bankruptcy Code (IBC) in Lok Sabha, Sitharaman said that businessmen should get honourable exit or resolution to the problem in letter and spirit of the IBC.

"Business failures in this country should not be tabooed, or looked down. On the contrary, we should give an honourable exit or resolution to the problem in letter and spirit of the IBC," she said.
Siddhartha's body was found on the banks of the Netravathi river in Karnataka on Wednesday.
In a letter purportedly written by him, Siddhartha alleged, among other reasons, harassment by the Income Tax Department as cause for his extreme step. The IT department has denied the charges.
Jayadev Galla (TDP) said businesses may fail because of economic downturn or business cycle.
Galla also said that accountability of banks need to come under scrutiny.
"Signing of personal guarantee (by industrialist to take loan) is leading to taking extreme action like suicide," he asserted.
Kalyan Banerjee (TMC) said that those who have taken loans from banks, will have to pay.
Pinaki Misra (BJD) referred to the death of the coffee tycoon, saying it is unfortunate that the insolvency law "should continuosly continue to grow and expand in our country."
He said it does not bode well for the country because "that is not how you reach the $5 trillion mark."

CCD names S V Ranganath as interim chairman; Nitin Bagmane as interim COO

Coffee Day Enterprises on Wednesday named independent director S V Ranganath as the interim chairman of the company to replace its founder V G Siddhartha, who has been confirmed dead days after he went missing. The company board, wherein Siddhartha's wife Malavika Hegde is also a director, met on Wednesday to put in place a working structure of the company.
The board appointed "S V Ranganath as the interim chairman of the board" and "Nitin Bagmane as an interim chief operating officer (COO) of the company," Coffee Day Enterprises, which runs India's biggest coffee chain CCD, said in a regulatory filing.

It also constituted an executive committee comprising Ranganath, COO Nitin Bagmane and CFO R Ram Mohan "to exercise the powers previously vested with the Chief Executive Officer of the company and the Administrative Committee constituted by the Board in 2015," it said.
"The board will, in due course, prepare a detailed charter of authorities vested in the Executive Committee and approve the same," the filing said.
The Executive Committee will explore opportunities to deleverage the Coffee Day Group, it said.
The body of Siddhartha, who had been missing since Monday evening, was found on Wednesday in the Netravati river in Dakshina Kannada district of Karnataka after 36 hours of intense search, officials said.
Siddhartha purportedly wrote a letter indicating he was anxious about pressure from banks, investors and the tax authorities before he went missing.
"The board took cognizance of statements in the purported letter from V G Siddhartha relating to financial transactions outside the knowledge of the senior management, auditors and the board.
"While the authenticity of the letter is unverified and it is unclear whether these statements pertain to the company or the personal holdings of V G Siddhartha, the board took serious note of the same and resolved to thoroughly investigate this matter," the filing said.
The board expressed its condolences to Siddhartha's family and resolved to lend its support and expressed full confidence in the company's management team.
"The board also took note of a message from Malavika Hegde expressing support and trust in the company's professional team and the common effort to look after the interest of the employees and all other stakeholders," it said. "The board remains deeply committed to safeguarding the interests of all stakeholders, including investors, lenders, employees and customers." The company said the Audit Committee and Executive Committee will engage in discussions with the statutory auditors of the company and such other advisors as may be necessary with a view to recommend appropriate next steps to the board at its forthcoming meeting on August 8.
The board has also appointed Cyril Amarchand Mangaldas as its legal counsel to advise on these matters.

Curious case of CCD founder: V G Siddhartha was under heavy debt burden

As the search for Coffee Day founder VG Siddhartha continues, the mystery behind the entrepreneur going missing has become murkier with the emergence of a letter addressed to the company board. Though the genuineness of the letter is yet to be established, Siddhartha has allegedly pointed out the pressure from private equity firms for early exits.
Coffee Day Enterprises, the holding firm of Coffee Day, had a total debt of around Rs 6,550 crore as on March 2019. Sources in the know said that debt level of the entity had drastically reduced after Siddhartha's stake sale in Mindtree.
In March this year, he had sold his entire 20.32 per cent stake in the Bengaluru-headquartered IT services firm to engineering major, L&T for around Rs 3,200 crore, which had been utilised to pare some debt from Coffee Day Enterprises' balance sheet. Industry experts said that the Mindtree stake sale to L&T despite opposition from its founders could be linked to the desperateness of Siddhartha to reduce the company's debt, which was taking a toll on the working capital need of the firm due to high-interest outgo. Recently, news reports also suggested that the Coffee Day Group was in talks with global beverage maker Coca-Cola for selling a slice of its equity at an enterprise valuation of around Rs 10,000 crore.
Cafe Coffee Day (CCD), set up in August 1996, has grown to include 1,750 stores across India with 60,000 vending machines as of now. It also has outlets across Europe as well as in Malaysia, Nepal, and Egypt. The group's coffee business, which includes some exports of the bean, reported a revenue of Rs 1,777 crore in FY18 and Rs 1,814 crore in FY19.
Other than the coffee retail chain and his investment in tech firms, the Coffee Day Group has diversified in its bid to emerge as a business conglomerate. The group forayed into real estate through its wholly-owned subsidiary called Tanglin, which develops technology parks and Special Economic Zones for the IT industry. Its logistics arm, Sical, provides end-to-end solutions in port handling, road, and rail transport areas. The group has also ventured into hospitality through Coffee Day Hotels & Resorts. Way2Wealth is a leading financial service provider from Coffee Day's stable.
Though the total enterprise value of the group is yet to be ascertained as most of them are privately held but some reports had suggested that private equity major Blackstone was in talks to buy a majority stake in Siddhartha’s real estate venture Tanglin Developments for around Rs 2,800 crore. Tanglin has a tech park - 'Global Village', which is a 4-million-sq ft tenanted office space located on a 120-acre campus in Bengaluru, and counts Accenture and Mphasis among its tenants, besides having the headquarters of Mindtree.
"With rising competition from new retail chains and capital intensive nature of some of his businesses, Siddhartha was under pressure. But, the group has better financial health than many other debt-laden conglomerates," said a person familiar with the businesses of Coffee Day Group.