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Reducing debt: Coffee day to sell tech park to Blackstone for up to Rs 3,000 crore

The divestment is a step towards develeraging the group’s debt.

In a first major announcement post the demise of Coffee Day Enterprises (CDEL) founder VG Siddhartha, the company said it is set to sell its Global Village Tech Park to global private equity player Blackstone. The firm indicated it has entered into a non-binding letter of intent with the investor.

The divestment is a step towards develeraging the group’s debt. According to Bloomberg, CDEL has a gross debt of Rs 6,547.38 crore.

Global Village Tech Park is located in Bengaluru and is held by CDEL’s subsidiary Tanglin Developments. Tanglin was set up for the development of technology parks and SEZs (special economic zone), offering bespoke facilities for information technology and information technology-enabled services.

CDEL indicated that the transaction, which is valued at about Rs 2,600-3,000 crore, 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.

According to a source aware of the deal, property developer Salarpuria Sattva is also involved in the transaction. However, it is not yet clear how much would Blackstone and Salarpuria be each acquiring in the Global Village Tech Park. CDEL has not mentioned Salarpuria’s name in the statement.

CDEL’s board has also provided its in-principle approval for disinvestment in its step down subsidiary, AlphaGrep Securities, in favour of Illuminati Software for an approximate amount of Rs 28 crore.

“The above mentioned transactions will significantly help in deleveraging the Coffee Day Group, and ensure smooth operations while safeguarding the interest of all stakeholders, including investors, lenders, employees and customers,” CDEL said in a statement.

On July 30, CDEL had communicated to the stock exchanges about the disappearance of its founder Siddhartha. In a letter that was purportedly written by Siddhartha and which was revealed to the stock exchanges by CDEL, the Cafe Coffee Day founder said “he could not take any more pressure from one of the private equity partners forcing me to buy back shares”.

The board eventually appointed SV Ranganath as the interim chairman and Nitin Bagmane as the interim chief operating officer. It also formed an executive committee comprising Ranganath, Bagmane and R Ram Mohan, the CFO, to exercise the powers previously vested with the CEO and the administrative committee constituted by the board in 2015. CDEL had asserted that the executive committee will explore opportunities to deleverage the Coffee Day Group.

The board then appointed EY to investigate into the circumstances leading to statements made in the purported letter of Siddhartha and to scrutinise the books of accounts of the company and its subsidiaries. It also appointed Malavika Hegde as an additional member of the executive committee.

The announcement for the deal came post market hours on Wednesday. Shares of CDEL closed Wednesday’s trading session on the lower circuit, down 4.95% at Rs 66.25 on the BSE. Since July 30, the stock has lost more than half of its value.

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Source: Financial Express