McLeod Russel sale plan may draw interest from Assam Company's suitors

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McLeod Russel’s proposed sale of some gardens in Assam and exit from the Dooars region may take the sheen off the Assam Company sale, which comes with the trappings of regulations of the Insolvency and Bankruptcy Code (IBC).

For tea producers looking for expansion, who found it difficult to bid for Assam Company India, McLeod provides a second chance to buy higher-end gardens; for others, it opens up options. 

According to McLeod executives, the acquisition of their gardens may be smoother and less complex than those of Assam Company, where allegations have started stacking up in the NCLT as well as the appellate tribunal.

Besides, UK-based Camellia PLC-owned Goodricke Group was initially interested but backed out from even submitting an expression of interest. Sources said as many as 14 expressions of interest had been submitted for the sale of Assam Company. 

“This is a private sale and hence it is expected that it will be faster than other means,” said Azam Monem, director at McLeod Russel, also chairman of the Indian Tea Association.

On the other hand, it may give buyers more options and negotiate valuation of the estates. Companies like James Warren Tea, Goodricke Group, M K Shah Exports, Luxmi Tea and several others are looking to expand their portfolio. 

Atul Asthana, CEO and managing director at Goodricke Group, said, “We may look at gardens in Assam for purchase but will need approval of the Camellia board first.”

This company was initially interested to buy the assets of Assam Company but after the RP invited applications for EoI, it didn’t submit one as it didn’t want to idle a Rs 50 million earnest money deposit and also didn’t have Rs 500 million cash and cash equivalent in hand, that were among the bidding conditions. 

In the Guwahati bench of the NCLT, James Warren Tea and M K Shah Exports have contended that the eligibility condition set by the RP is arbitrary and it disqualifies most of the serious tea companies.

The resolution professional for Assam Company, T Kannan, however, has justified the eligibility criteria, stating that such terms have been incorporated so that weaker and smaller players who may not be able to manage Assam Company after acquisition at a later date can be kept out of the bidding process.

However, McLeod Russel’s decision of estate sales may come as a breather for such companies. “In case the resolution process for Assam Company is delayed and we feel that we will not be able to acquire this company, we will look at other gardens in Assam,” Atul Ruia, CEO at James Warren Tea, said.

Sources said Luxmi Tea, owners of Makaibari, and M K Shah were in the fray for some of the gardens of McLeod. However, there were three-four more companies interested and negotiations would be held for the area and price. 

The valuation for McLeod gardens could be between Rs 300 and Rs 350 a kg.