Debt-laden tea major McLeod Russel on Monday said its board of directors has approved the execution of an exclusivity agreement with Carbon Resources to exclusively negotiate and evaluate a mutually agreeable mechanism for selling ‘identified’ tea gardens.
The funds which the Khaitans-led McLeod is planning to get from the proposed sale of gardens are to be used for the much-needed “one-time settlement ” of its debt to lenders.
FE on June 23 reported that Jalans-owned Carbon Resources is planning to buy 15 tea estates from McLeod for around Rs 750 crore as talks between the two companies have resumed.
“This time Carbon is planning to sign a binding deal with the McLeod within July 28 for acquiring the tea gardens,” sources close to the development said on Monday.
In a stock exchange filing, the tea maker said its board approved the execution of the exclusivity agreement with Kolkata-based Carbon to discuss, negotiate and evaluate a mutually agreeable mechanism for monetisation of identified assets of the company for a one-time settlement of the debt to its identified lenders, pursuant to a debt resolution process to be undertaken by the lenders as per the Reserve Bank of India’s prudential framework for Resolution of Stressed Assets.
“This exclusivity arrangement on the proposed asset sale is till July 28, 2023 is in furtherance to and on terms similar to the exclusivity agreement which was earlier approved by the board of directors and executed by the company at its meeting held on January 21, 2023, which had expired on March 31, 2023,” it added. The company’s debt stands at around Rs 1,700 crore.
Under the previous pact too, Carbon had offered to pay around Rs 750 crore for acquiring 15 tea estates. McLeod has 33 tea estates which produce over 40 million kgs of the brew.
The Khaitans have suggested around Rs 1,030 crore as one-time settlement (OTS) amount to its lenders, according to sources aware of the matter. The lenders to the company are ICICI Bank, State Bank of India, Indian Bank, RBL Bank, Axis Bank, HDFC Bank, UCO Bank, Punjab National Bank, Yes Bank and IndusInd Bank.
Carbon Resources, on June 15, exited McLeod Russel, having sold all its shares in the company through open market transactions. The company had picked up a 5.03% stake in McLeod from the open market in September last year. The Khaitans have a 6.25% stake in Mcleod.