Debt-laden tea maker McLeod Russel on Saturday said its board of directors has approved the execution of an ‘exclusivity agreement’ with Carbon Resources to negotiate and evaluate a mutually agreeable mechanism for the company to offer a proposed ‘one-time settlement’ of its debt to lenders.
The board of directors of McLeod Russel in a meeting held on Saturday considered and approved the execution of an exclusivity agreement with Carbon Resources for a period of 60 days, to exclusively discuss, negotiate and evaluate a mutually agreeable mechanism for the company to offer a proposed one-time settlement of the debt owed by the company to its identified lenders, the company said in a stock exchange filing.
Notably, FE last month reported that Carbon Resources, which had made a non-binding offer to McLeod Russel’s lenders to acquire a controlling stake, said it would support the debt-laden tea major in striking a debt restructuring deal with the lenders. And, the deal is likely to be in the form of a one- time settlement (OTS). “Mcleod Russel approached us. They want our support for their debt restructuring with the lenders. We are going to support them to settle with the lenders,” Mahendra Sharma, chief of finance at Carbon Resources, had told FE.
In the stock exchange filing on Saturday, McLeod said the proposed debt resolution process to be undertaken by the lenders as per the Reserve Bank of India’s Prudential Framework for Resolution of Stressed Assets dated June 7, 2019. The Khaitans, the promoter, has only a 6.25% stake in Mcleod Russel, whose debt stands at over Rs 1,700 crore.
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. “The agreement expresses the parties’ interests in continuing exclusive discussions in the matter and does not create any legally binding obligation on any party,” the stock exchange filing added.