Coffee Day receives first tranche of Global Tech Park sale proceeds

After much delay, the deal got clearance from creditors

Coffee Day Enterprises (CDEL) is learnt to have received the first tranche of payment from private equity major Blackstone and realty firm Salarpuria Sattva Group as part of its agreement to sell Global Village Tech Park, sources in the know said.

Proceeds of around Rs 150 crore were received by the Bengaluru-based coffee chain, they added. The deal has valued the tech park at Rs 2,700 crore. Despite announcing its decision to divest stake in the Global Village Tech Park in August last year, the deal was stuck due to lack of creditors' consent. Especially, a no-objection certificate from YES Bank was pending, which led to delay in concluding the deal. “After receiving all the approvals from creditors, the Global Village Tech Park transaction was completed,” said a person. “The rest of the proceeds will be paid out in next few weeks," he said. 

With this payout, the working capital situation is likely to improve for the Bengaluru-based coffee chain. A major chunk of the proceeds is likely to be utilised in reducing the overall debt of the company, interest outgo is expected to fall in the coming quarters. 

By the end of July 2019, the group’s aggregate debt stood at Rs 4,970 crore, of which Tanglin Developments’ liabilities were at Rs 1,622 crore. CDEL’s flagship coffee retailing arm Coffee Day Global’s total debt was Rs 1,097 crore. Sources said around Rs 2,000 crore of proceeds from the Global Village Tech deal would be utilised to reduce debt. As part of its deleveraging initiatives, CDEL has divested its brokerage business ‘Way2Wealth Securities’ to Shriram Ownership Trust in January. 

After the demise of CDEL's founder chairman V G Siddhartha last year, the conglomerate is facing liquidity crunch owing to higher interest outgo towards servicing debt. This deal of Global Village Tech Park is critical for the firm to reduce its debt and ease working capital situation.

Currently, trading in CDEL's shares remains suspended as the company was not able to submit its audited financial statements in time. 

The company has sought more time from regulators for submission of audited results citing to non-completion of internal investigations. In August last year, the company has assigned Ashok Kumar Malhotra, retired DIG of the Central Bureau of Investigation (CBI) to investigate into the purported letter written by V G Siddhartha. He was also assigned to scrutinise the books of accounts of the company with the help of an accounting firm.