Debt-laden tea major McLeod Russel on Friday said its board of directors has approved the execution of a “binding term sheet” with Carbon Resources to formalise the terms of sale of the identified tea estates to the latter for around Rs 700 crore. Khaitans-owned Mcleod Russel plans to use funds from this proposed sale of gardens for the one-time settlement of its debt to lenders, the company said in a filing on Friday.
FE on June 23 reported that Jalans-owned Carbon Resources was planning to buy 15 tea estates from McLeod as talks between the two Kolkata-based companies have resumed. The binding term sheet for the sale is likely to be signed on Saturday, according to sources with direct knowledge of the matter.
The bulk tea producer’s board on July 10 approved the execution of an exclusivity agreement with Carbon to negotiate and evaluate a mutually agreeable mechanism for the sale.The company’s debt stands at around `1,700 crore. The firm owns 33 tea estates— 31 are in Assam and two in West Bengal. It sold as many as 31 tea gardens in the last 11 years mainly to improve cash flow, which was necessary to meet rising costs. For FY23, the tea producer posted a whopping net loss of `1,056.50 crore. Notably, the Khaitans have suggested around Rs 1,030 crore as OTS amount to the lenders, according to the sources. 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 only a 6.25% stake in Mcleod.
