Coffee Day sells Global Village Tech Park to Blackstone for $389m

Photo: Bloomberg

Coffee Day Enterprises Ltd., the holding company of 52 Coffee Day Group subsidiaries founded by the late V.G. Siddhartha, on Friday closed its deal to sell off Global Village Technology Park in Bengaluru to New York-based private equity giant Blackstone Group Llp.

Two people familiar with the deal confirmed this.

The deal, involving the sale of the 90-acre tech park, was finalized at ₹2,800 crore, according to the first person.

“The money will be credited to CDEL within the next week. ₹2,000 crore from the proceeds of the deal will be used to repay debts of CDEL and ₹800 crore will be going to the books of CDEL to meet its working capital requirements,” said the first person.

When contacted by Mint, a Blackstone spokesperson declined to comment.

As on 31 March, CDEL— whose main subsidiaries include Coffee Day Global Ltd (coffee business), Sical Logistics Ltd (integrated logistics), Tanglin Developments Ltd (realty), Way2Wealth (financial services) and Coffee Day Hotels and Resorts Ltd (hospitality)—had debt obligations of at least Rs.7,653 crore.

This debt has come down after Siddhartha and two CDEL subsidiaries sold their entire stake in Mindtree Ltd. to Larsen and Toubro Ltd. for Rs. 3,200 crore and used a part of this money to repay debts of CDEL’s subsidiaries.

“Repayments between March and June end too helped CDEL reduce loan obligations at a consolidated level. The asset sale will help CDEL pare its debt obligations from ₹4,400 crore to ₹2,400 crore, which will be further lowered via sales of some of CDEL’s other assets over the next two months,” said the first person.

On 9 August, a little over a week after the alleged suicide of Café Coffee Day founder V.G. Siddhartha, the CDEL board decided to sell the technology park, which is owned by Tanglin Developments Ltd, a subsidiary of CDEL, according to a Mint report.

Mint first reported on On 1 August that CDEL was planning to selectively sell assets of the Siddhartha-founded company to pare debt incurred by the group’s 52 units.

On 14 August, CDEL announced in an exchange filing its decision to sell the Global Village Tech Park to Blackstone Group for a price of ₹2,600-3,000 crore.

Following a board meeting on 14 August, CDEL further said that the company’s board has provided an in-principle approval for disinvestment in its step-down subsidiary, AlphaGrep Securities Pvt. Ltd in favour of Illuminati Software Pvt. Ltd. for an approximate amount of ₹28 crore, according to the exchange filing.

The company had said these two transactions will further help in deleveraging the Coffee Day Group.

This article was first published on livemint.com