With YES Bank approval on cards, Coffee Day-Blackstone deal almost sealed

In a major relief to Coffee Day Enterprises (CDEL), YES Bank is learnt to have softened its stance and decided to render the ‘no objection’ to the Bengaluru-based firm’s decision to sell its Global Village Technology Park to Blackstone. The private sector lender has conveyed this decision verbally while a formal letter of approval is expected to reach Coffee Day Group in the next 2-3 days, highly placed sources privy to this development said.

“It (the no objection) has not formally come so far, though it is expected in the next 2-3 days,” one of the person sited above said. “What we understand is that YES Bank has a process as a part of which the decision (to issue ‘no objection’) needs to be approved by an internal committee. The good thing is that they are less hostile now and also a little more amenable.”

Owned by its subsidiary Tanglin Developments, Global Village Technology Park, which is spread over 91 acres, with a built-up area of around 4 million square feet, houses marquee tenants like Accenture and Mindtree. In August, CDEL had announced to sell group-owned Global Village Technology Park in Bengaluru to private equity major Blackstone Group for Rs 2,800 crore. 

While most other regulatory approvals were in place, YES Bank, the single-largest lender to the Coffee Day Group, had shown reluctance to give its nod to the deal unless the latter repays the entire loan taken at the group level or at least those availed by its subsidiaries Tanglin Developments and Sical Logistics. This had caused a major roadblock for CDEL in receiving the first tranche proceeds from Blackstone of Rs 2,000 crore that is expected to reach it anytime soon.

“The plan is to first settle the loans taken by Tanglin out of whatever money the company receives in first tranche after the regulatory and tax expenses. As a part of that, YES Bank would have received Rs 100 crore, its exposure to Tanglin though they wanted Rs 50-crore loan that was taken by Sical,” said another person. 

Both YES Bank and CDEL could not be reached for comments. 

By the end of July, Coffee Day group’s aggregate debt position stood at Rs 4,970 crore of which Tanglin Developments’ liabilities stood at Rs 1,622 crore followed Coffee Day Global, its retailing arm, at Rs 1,097 crore. The group has initiated several deleveraging measures to reduce its overall debt for which it has hired IDFC Securities as consultant. Besides, subsidiary Sical Logistics has also appointed ICICI Securities for finding out various deleveraging options. 

“Sical has something (received some proposals) that they are working on. It’s a work in progress though they may have to wait for some more time,” sources added.

Meanwhile, CDEL is waiting for the report of the internal investigation it has announced earlier to probe into the content of the letter allegedly written by its former Chairman V G Siddhartha and scrutinise its books of account before expanding its board of directors. 

Ashok Kumar Malhotra, a former DIG at the Central Bureau of Investigation, has been hired for this while he is being assisted by external agencies, including law and auditing firms. CDEL currently has a three-member board, including Siddhartha’s wife Malavika Hegde and S V Ranganath, a retired bureaucrat who acts as the chairman now.

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