Coffee Day Enterprises Limited's (CDEL) sale of its prime real estate property Global Village Tech Park to private equity major Blackstone is now finalised, and may be announced as early as Tuesday. The parent of the Cafe Coffee Day (CCD) chain had approved the divestment in mid-August in a bid to deleverage the group and reduce the company's debt pegged at close to Rs 5,000 crore.
"The transaction will involve an initial payment of Rs 2,000 crore in the coming weeks and the remaining Rs 700 crore will be paid within the next one year, once formalities on the demerger of the asset is done," a source in the know told The Times of India. The deal is being done through a special purpose vehicle where Blackstone will own 80 per cent and the remaining 20 per cent will be held by southern developer Salarpuria Sattva.
The 120 acre Global Village Tech park situated on Mysore road in Bengaluru houses headquarters of Mindtree while several companies such as Globaledge software, Magnasoft, NTT data and Textron have their offices there. The IT park also counts Accenture as an anchor client.
This deal marks CDEL's first major divestiture. The company has been in trouble since the death of the company's MD and Chairman VG Siddhartha, even as its stock has taken a hammering. Last month, CDEL issued a statement clarifying the debt position of the company along with the breakup of the loans in its major subsidiaries for the first time. The company claimed that the group's total debt stood at Rs 4,970 crore, of which Rs 4,796 crore was secured loans and another Rs 174 crore was unsecured. The biggest share of the group's loans is with the real estate development subsidiary Tanglin Developments Limited, which had held Global Village Tech Park.
Having halved its existing debt burden to Rs 2,270 crore, CDEL is now looking for buyers for its logistics subsidiary Sical Logistics. The buzz is that the deal could raise Rs 1,000-1,500 crore. It is also in talks to sell CCD.
For Blackstone, the deal expands its growing office real estate portfolio in the country - its total investments in the real estate market are pegged at around $5.8 billion across 34 deals, excluding the tech park Embassy Office Parks, a joint entity of the US-based investment firm and the Embassy Group, also launched India's first real estate investment trust (REIT) recently to raise Rs 4,750 crore. Blackstone is reportedly also finalising its deal to buy IndiaBulls Real Estate's remaining office portfolio for Rs 4,420 crore.
CDEL's share price is currently up 2.22 per cent at Rs 75.95 apiece.