CCD management meets investors to allay concerns

The new top management team of Coffee Day Enterprises met investors and lenders in Mumbai earlier this week and assured an early resolution of outstanding debt at the coffee retailer. The meeting was an attempt to allay concerns of an anxious investment community after its founder’s tragic death in July.

The management was apprehensive of any investor/lender legal action, which could delay the process of resolving the crisis.

The company has started monetizing assets to repay banks and private equity funds. It is also negotiating with strategic investors, multiple sources with direct knowledge of the situation told ET.

CCD didn’t to respond to ET’s query.

“It met financial institutions and mutual funds that lent to the CCD group companies as the company management sought to win over anxious investors,” said one of the persons cited above.

CCD has total debt of Rs 4,970 crore, according to its regulatory filing on August 17. The company’s major lenders include Standard Chartered Bank, IDBI Bank and Yes Bank. Private equity funds such as KKR & Co, New Silk Route, Affirma Capital (it manages portfolios of Standard Chartered Private Equity), SSG Asia and some high-profile individual investors of Bengaluru and Mumbai also have exposure to the coffee chain.

A senior investor relations executive has been coordinating with investors/lenders. This was for the first time that the new top management team, which included the CFO, met various investors/lenders this Monday and Tuesday. This was the first such meeting with investors after founder VG Siddhartha’s reported suicide late July.

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“Investors apparently agreed to give more time to the struggling group as any further cases may upset the entire resolution exercise,” said an executive present in one of the meetings. “The management is at an advanced stage of monetising its technology park, which will provide good liquidity.”

The CCD board will hold its annual general meeting on September 30.

The company fell into trouble after its chairman VG Siddhartha allegedly committed suicide.

Representatives of the family of VG Siddhartha and US buyout fund Blackstone agreed to resume talks for the potential sale of a 90-acre technology park owned by the Coffee Day group at an estimated value of about Rs 3,000 crore, ET reported on August 2.

ET also reported on August 19 that the promoter family has decided to restart negotiations with Coca-Cola, which had entered into exclusive talks with CCD, for a strategic investment.

Earlier, investors sought more CCD shares collateralised against their credit. With plunging share prices, they asked the company management to bring in more shares.

Collateral against such bonds were in the range of 1.25x and 2.75x. However, tumbling share prices led the cover slip below the investment value.

DSP Mutual Fund has written off 50% of its investments in NCDs issued by Coffee Day Natural Resources Private Limited (CDNRPL), a company owned by the deceased promoter of Coffee Day Enterprises Limited (CDEL).



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