Carbon Resources, which has expressed its intention to acquire debt-laden tea major McLeod Russel, will be running the company “professionally” and won’t sell any tea garden, if the proposed takeover takes place, according to sources at the electrode paste producer.

The Kolkata-based carbon products manufacturer has sent a non-binding letter of intent to the lenders to McLeod Russel for acquiring a controlling stake in the company, which belongs to the financially stressed Williamson Magor group. The lenders are likely to meet on September 22 to discuss the Rs 1,245-crore offer from the Jalans-owned company.

“We are keen to acquire McLeod Russel as it is a very good asset. It is a well though out plan, which we have given to the banks. The offer we have given to the banks is very reasonable. They will be able to recover a lot of public money. We have money to fund this transaction. We have a surplus of around Rs 300 crore which we can deploy as equity in Mcleod,” sources cited above told FE.

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According to the offer,  Carbon Resources would infuse upfront equity worth Rs 300 crore and a debt of Rs 945 crore to resolve Mcleod’s outstanding debt. Secured lenders would be paid in full, while unsecured lenders would have to take 45% haircuts.

“We are waiting for the bankers to come out with a clear stand. Once the banks come out with the clear stand, we will work overtime to get it done in 60 days. We have asked the banks for 60 days for due diligence. So, according to our proposal, within two months, we will be infusing the equity and will be ready with the debt financing. It depends on how fast the banks act on this and how soon they make the papers available to us to start our process,” sources said.

The lenders to the company are Indian Bank, RBL Bank, Axis Bank, HDFC Bank, ICICI Bank, State Bank of India, UCO Bank, Punjab National Bank, Yes Bank and IndusInd Bank.

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Notably, Carbon Resources picked up a 5.03% stake in McLeod from the open market on Friday, sending the stock rising to the upper circuit of Rs 28.35. Amid the takeover buzz, Mcleod Russel scrip also touched the upper circuits on both Monday and Tuesday. “Carbon Resources picked up this stake to show lenders that the company is keen to acquire McLeod. It is a solid asset,” a company executive said.

Carbon Resources, incorporated in 1991, has four manufacturing locations. It operates an electrode paste plant with production capacity of 60,000 MT/year at its Giridih plant in Jharkhand. It also produces tamping paste used widely in the ferro alloys industry and allied industries. “It is a solid company. Deloitte is our auditor. In FY22, the company clocked revenue of Rs 2,500 crore, while net profit was Rs 270 crore,” the executive said. Suresh Kumar Jalan, Renu Devi Jalan, Abhinav Kumar Jalan, Abhishek Jalan and Rohit Kumar Bagri are the directors of the company, according to information available with the Ministry of Corporate Affairs. “We are looking for an opportunity to diversify our company sitting on cash. It looks like a good opportunity. And that is why we bid for the company. McLeod Russel is a very good asset. The company went sick because it gave loans to its sister concerns. If you run your gardens well, you would be successful. There are so many companies running their tea business successfully. Companies should not be over-leveraged,” sources at Carbon Resources said.