Coffee Day Says Asset Sales Aimed At Paring Debt, Ensuring Liquidity
Coffee Day Enterprises embarked on a deleveraging exercise to pare debt after VG Siddhartha’s death on July 31.
Coffee Day Enterprises Ltd., whose long-term rating was recently downgraded to 'D' by credit rating agency ICRA Ltd., is "deleveraging its assets" for debt reduction and to ensure liquidity position for the company.
Coffee Day embarked on a deleveraging drive after founder VG Siddhartha’s death on July 31. The company’s board recently approved sale of its Global Village Technology Park in Bengaluru to private equity firm Blackstone Group for up to Rs 3,000 crore.
Media reports have indicated that ITC Ltd. may pick up a stake in Coffee Day, while it was also said to be in talks to sell off subsidiary Sical Logistics Ltd.
"The company is in the process of deleveraging its assets to ensure liquidity position for the company...," Coffee Day said in a regulatory filing on Friday.
On the downgrade by ICRA, the company said, "The ratings action follows the delay in debt servicing by CDEL's flagship subsidiary Coffee Day Global Ltd. and Sical group of companies. The ratings agency, based on a Rs 315 crore term loan, had earlier this week downgraded Coffee Day’s long-term ratings to ‘D’ with negative outlook from 'BB+' with negative outlook.
The Coffee Day Group, which runs port terminals and container freight stations, was working on "strategic alternatives" to deleverage the company, the statement added. On Thursday, Sical Logistics said it has an external debt of Rs 1,488 crore, secured by the personal guarantees of Siddhartha.
On Friday, Coffee Day shares rose 4.97 percent to Rs 73.95 apiece on the BSE while the benchmark Sensex gained 0.82 percent to end the day at 37,407.36 points.