Looking to raise fund to recast debt: Koutons Retail
Press Trust of India / New Delhi Dec 23, 2010, 18:44 IST
Debt-ridden apparel retail chain, Koutons Retail today said it is in talks with private equity players and lenders to raise money to overcome cash crunch due to declining sales.
"Koutons Retail has been facing a cash crunch on account of declining sales and the overall scenario of the retail sector. This prompted the company to explore the need to recast its debt as well as to mull multiple options to raise money," Koutons Retail Chairman D P S Kohli said in a statement.
He said the company is in talks with its lenders for debt recast and some private equity players for its fund raising plans.
"The company is confident that it will successfully complete this period of consolidation and continue to serve millions of customers and many shareholders," Kohli added without disclosing further details.
There has been speculation in the market that the company is planning to sell 15 per cent stake to private equity players.
A few private equity companies such as TPG Capital and Banyan Tree Finance are reported to be currently holding discussions with Koutons for the same.
TPG Capital, which has been an investor in another troubled retailer Vishal Retail, is also in the process of taking over the cash and carry business of Vishal.
Comments from TPG could not be obtained as calls made to officials remained unanswered, while Banyan Tree Finance officials could not be reached.
Koutons Retail has been facing cash crunch for a long time and its debt kept rising. Earlier this year, it also saw exit of three directors and two senior executives, including the chief financial officer (CFO).
As on March 31, 2010, Koutons had a debt of Rs 660 crore. Currently, the company has 1,020 stores pan-India -- a mix of company-owned and franchisee-owned that sell range of men, women and children apparel.
The company launched its first retail outlet in 2002, and got listed in 2007. Currently it sells products under two brand names 'Koutons' and 'Charlie Outlaw'.
In the quarter ended September 30, Koutons Retail registered net sales of Rs 163.36 crore and net profit of Rs 2.26 crore.
Koutons' scrips closed today at Rs 58.30 per share at the Bombay Stock Exchange, up 0.87 per cent from the previous close.
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