Promoters' holding in Coffee Day dips 28% to 25.35% as of Sept quarter

The demise of Siddhartha worried market participants and lenders over the high debt level of the group

Promoters' holding in Coffee Day Enterprises (CDEL) has dipped 28 per cent to 25.35 per cent as of September quarter. Experts say some lenders may have invoked shares pledged by the company's promoters in the second quarter, leading to such dilution of holdings. According to regulatory filings, the promoter and promoter group of CDEL include the founding chairman of Coffee Day group V G Siddhartha, Malavika Hegde, Devadarshini Info Technologies, Coffee Day Consolidations and Sivan Securities. The firm said the total percentage of shares pledged by promoters increased to 79.94 per cent as of September compared to 75.7 per cent reported in the June quarter.

"Lenders to the promoters have invoked the shares pledged, which has led to such a big dip in the promoters' holdings," said Shriram Subramanian, founder of corporate governance advisory firm InGovern.  

During the second quarter, CDEL disclosed to the exchanges on multiple occasions about shares being liquidated by the lenders to recover the amount owed by the promoter group. However, sources in the know said that unless the promoters take immediate measures to free up pledged shares, they may see further dip in their holding. 

After the demise of Siddhartha, market participants and lenders were worried over the high debt level of the group and its ability to service its obligations.

However, the company has taken several deleveraging measures to reduce its overall debt level. As part of this initiative, CDEL has entered into a definitive agreement with Blackstone and Salarpuria Sattva Group last month to sell the 'Global Village Tech Park' for Rs 2,700 crore. Similarly, the company had roped in IDFC Securities as a consultant to advise the company on refinancing existing debt and repaying of current debt. 

Another group company, Sical Logistics has appointed ICICI Securities for finding out various deleveraging options. Apart from all these measures, CDEL has also appealed its creditors and lenders to provide sufficient time for honouring its repayment obligations. The debt level of the group stood at Rs 4,970 crore at the end of July, 2019.