Carbon Resources, which is planning to sign a new binding deal with debt-laden McLeod Russel soon, is not likely to pay more than Rs 750 crore for acquiring 15 tea gardens from the tea major.
Under the previous pact with McLeod, signed in January, Carbon had offered to pay around Rs 750 crore for acquiring the same number of tea estates.
There is no possibility that Carbon Resources will offer to pay more under a new deal. In this case, Khaitans, the promoter of McLeod, will have to come up with the balance funds for the proposed one-time settlement (OTS) of the company’s debt to its lenders, two persons with knowledge of the matter told FE.
Notably, the Khaitans earlier suggested around Rs 1,030 crore as OTS amount to the lenders. The funds which McLeod plans to get from the proposed gardens sale are to be used for the much-needed OTS. The company’s debt stands at over Rs 1,700 crore.
Khaitans are still talking to the lenders for the possible OTS amount, the persons cited above said.
When contacted, Aditya Khaitan, chairman of McLeod Russel, did not want to make any immediate comment.
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.
Notably, the title of the Mcleod’s tea estates are now with the lenders as the company has a high debt. The company currently has 33 estates, which produce over 40 million kgs of the brew.
The Jalans, the promoters of Carbon Resources, have recently resumed talks on a new agreement with the Khaitans to acquire the tea estates. Carbon, the largest producer of electrode paste in India, earlier this month had exited McLeod Russel, having sold all its shares in the company through open market transactions.
Carbon had picked up a 5.03% stake in McLeod from the open market in September last year.
Carbon Resources on June 15 sold all its shares in the tea major as talks between the two companies on extending their exclusivity agreement had not fructified.
McLeod’s board had approved execution of the exclusivity agreement with Carbon Resources in January. The company was negotiating and evaluating a mutually agreeable mechanism for it to offer the proposed OTS of its debt to the lenders.
Interestingly, after the talks with Carbon had collapsed, the Khaitans reached out to a few tea companies, including Dhunseri Tea & Industries and MK Shah Exports, to sell as many as 13-14 of its tea estates for the proposed OTS. The Khaitans have only a 6.25% stake in Mcleod.