YES Bank has become the second-largest shareholder in tour operator Cox & Kings after it acquired a 18.55 per cent stake from the invocation of pledge. The private-sector lender has also picked up a 30 per cent stake in Cox & Kings sister concern ezeego1 following a loan default.
The 260-year-old travel firm is owned by the Kerkar family through domestic and overseas entities. The firm has been facing a liquidity crisis, resulting in loan defaults and rating downgrades in the past few months. This has led to promoters pledging additional stake to raise funds. Lenders have also invoked pledges following default. The promoter stake in the company fell 10 percentage points to 39.73 per cent between April and June, and has now been reduced to 21.18 per cent following YES Bank’s action. Over 69 per cent of the promoter stake was pledged as of June end.
YES Bank on Friday informed the stock exchange that it acquired 32 million shares in Cox & Kings, amounting to 18.55 per cent of the paid-up capital. It also took 34,080 shares in ezeego1, taking a 30 per cent stake in the firm. It said the pledge was invoked following a loan default by ezeego1, a B2B travel firm owned by the Cox & Kings promoters. Cox & Kings had a debt of Rs 3,238 crore at end of FY19, comprising of both short-term and long-term debt.
The business of ezeego1 has come to a halt since late last month after the International Air Transport Association suspended the firm from selling tickets on credit and it laid off over 100 employees.
Cox & Kings did not comment on the development. On Wednesday, the tour operator had said that it was working closely with its lenders to optimise strong asset base globally to bring the situation back to normal as soon as possible. This was after the company defaulted on commercial paper of Rs 174 crore. In the past month, the company has defaulted on debt repayment of over Rs 200 crore leading to the withdrawal of credit from its suppliers too. The lenders, too, have turned cautious in renewing working capital facilities and increasing their exposure to the financially stressed company.
"We are trying to work out a solution for the tour operator," said a senior executive of a lender. He added the promoters, too, could be asked to infuse funds as part of the arrangement.