In the latest twist to McLeod Russel saga, Carbon Resources is now planning to sign a new binding deal with the debt-laden tea maker by next week to acquire as many as 15 tea gardens.
Last week, Carbon Resources, owned by the Jalans, sold all its shares in Khaitans-led McLeod, the country’s largest tea producer, after talks between the two companies on extending their exclusivity agreement did not fructify.
“Talks with Khitans have resumed. This time possibly we would sign a new binding agreement with McLeod,” Abhinav Jalan, director, Carbon Resources, told FE on Thursday. According to Jalan, this time too the number of tea gardens his company plans to buy remains 15. Currently, McLeod has 33 tea estates which produce over 40 million kgs of the brew.
“The money that Carbon will pay to acquire the gardens is still under discussion. It will be finalised hopefully by next week.” Jalan added. Under the previous pact, Carbon had offered to pay around Rs 750 crore for acquiring 15 tea estates. The funds which McLeod plans to get from this proposed sale are to be used for the much-needed “one-time settlement ” of its debt to lenders. Its debt stands at over Rs 1,700 crore.
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. Aditya Khaitan, chairman of McLeod Russel, was not available for a comment. 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 proppsed OTS of its debt to the lenders. 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.
Kolkata-based Carbon Resources, on June 15, 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. “We sold all our shares of McLeod Russel. We exited today (last Thursday),” Abhinav Jalan had told FE.
“In all practical purposes our exclusivity agreement with McLeod had expired as the company went into insolvency proceedings. When the company came out of the insolvency proceedings recently, we held a meeting with Khaitans. They were not interested in honouring the agreement that we had. So, we exited,” Jalan had said.
The Kolkata bench of the National Company Law Tribunal (NCLT) on February 10 admitted IL&FS Infrastructure Debt Fund’s insolvency petition for initiating CIRP against the country’s largest tea producer for a default in payment of s 347.47 crore as on November 12, 2019.
Aditya Khaitan, the promoter of the tea major, had moved the National Company Law Appellate Tribunal (NCLAT) against the NCLT’s order. Last month NCLAT allowed IL&FS to withdraw applications against the company after out-of-court settlement.
Interestingly, after the talks with Carbon had collapsed last week, the Khaitans reached out to a few tea companies to sell 13-14 of its tea estates for the proposed OTS. The Khaitans have only a 6.25% stake in Mcleod.