NEW DELHI: In a move that will significantly bring down the debt level of the group, Coffee Day Enterprises’ said it has reached a definitive agreement with US-based private equity major Blackstone along with southern developer Salarpuria Sattva to sell its prime real estate property Global Village Tech Park for Rs 2,700 crore. With the deal now finalized, Coffee Day’s balance sheet is expected to look healthier with the group's debt, currently pegged at nearly Rs. 5,000 crore, coming down by half.
“The rationale of the proposed sale is to focus on our core business while reducing the debt level of Coffee Day Group,” the company said in a regulatory filing. The first tranche of transaction will involve an initial payment of Rs 2,000 crore by October 31 this year and the remaining amount post the receipt of regulatory approvals.
The 120-acre park will be first demerged from Coffee Day Enterprises’ real estate unit Tanglin Development (TDL), which also owns a business park in Mangaluru. Sources say the deal is being done through a special purpose vehicle where Blackstone will own 80 per cent and the remaining 20 per cent will be held by Salarpuria Sattva.
For Blackstone, the deal expands its growing office real estate portfolio in the country. Its total investments in the real estate market are pegged at around $5.8 billion across 34 deals, excluding the tech park Embassy Office Parks, a joint entity of the US-based investment firm and the Embassy Group. It has also launched India's first real estate investment trust (REIT) recently to raise Rs 4,750 crore.
Clarifying the debt position with the breakup of the loans in its major subsidiaries, CDEL had recently said the group's total debt stood at Rs 4,970 crore, of which Rs 4,796 crore was secured loans and another Rs 174 crore was unsecured. The biggest share of the group's loans is with the real estate development subsidiary Tanglin Developments Limited. Tanglin has secured loans of Rs 1,622 crore, which are yet to be paid. Apart from real estate, the company's logistics subsidiary, Sical is also sitting on significant loans which stood at Rs 1,488 crore by the end of July. The buzz is that the company is also looking at monetising its stake in Coffee Day Hotels & Resorts, Sical and Magnasoft to reduce debt further. If materialised, the Sical deal could raise Rs 1,000-1,500 crore, said sources.
The CCD board will hold its annual general meeting on September 30.