The board of Coffee Day Enterprises Ltd (CDEL) Thursday took the decision to sell its 9-acre technology park in Bengaluru to bring down its debt burden. CDEL is the holding company of Coffee Day group firms.
Private equity giant Blackstone Group has emerged as one of the top contenders to buy the Global Village Park, owned by Tanglin Developments Ltd (a unit of CDEL). The New York-based company in the past week restarted talks to buy Tanglin Developments.
"The board has given its in-principle approval for the sale of IT park in Bangalore. Blackstone could be one of the potential buyers. The board is in favour of monetising the assets of CDEL and its subsidiaries, which will begin with the sale of the IT park," the Livemint quoted a source as saying.
The CDEL board on Thursday held a meeting to consider three key concerns - a potential sale of Coffee Day group assets to trim debt, means to ensure smooth continuation of CDEL's businesses after its founder and owner VG Siddhartha's death; and to select a forensic audit firm to corroborate the authenticity of the letter allegedly written by Siddhartha before his demise on July 29, the report added.
The board initially was scheduled to meet to review CDEL's financial results for the June quarter. But, CDEL said on August 2 that owing to some inevitable circumstances, the board will not consider the financial results for June 30 ended quarter in its meeting on August 8.
"The financial results announcement will be delayed further. The board will announce a new date soon," sources told the news daily.
However, the board's move to sell the technology park is in contrast with Siddhartha's decision to defer his original plans to put the Global Village Park on sale. This happened after he sold his entire 20.32% stake in Mindtree to Larsen and Toubro Ltd for over Rs 3,269 crore.
After the board meeting, CDEL appointed Ernst and Young LLP (EY) to investigate into the circumstances that led to the statements made in the purported letter of Siddhartha and to scrutinise the books of accounts of CDEL and its subsidiaries, the company said in a stock exchange filing.
The company also announced that it had appointed Malavika Hegde (VG Siddhartha's wife) as an additional member of the executive committee. The company's statement further said as a duty to all stakeholders and to provide a strategic direction "it was decided by the Board to appoint a person of eminence or a reputed firm as strategic corporate advisor/s to the Board".
On 31 July, shortly after the body of VG Siddhartha was found near Mangaluru, the board of CDEL met and appointed one of its independent directors SV Ranganath as interim chairman of the Board and Nitin Bagmane as interim chief operating officer of CDEL. It also constituted an executive committee comprising SV Ranganath, Nitin Bagmane (COO) and R. Ram Mohan (CFO) to exercise the powers that were previously vested with the Chief Executive Officer and the Administrative Committee constituted by the Board in 2015.
The company had also said that it had taken cognizance of statements in the purported letter from VG Siddhartha relating to financial transactions outside the knowledge of the senior management, auditors and the Board and resolved to thoroughly investigate the matter. It had also appointed Cyril Amarchand Mangaldas as legal counsel to advise it on the foregoing and related matters.
In the letter written by VG Siddhartha on 27 July, he blamed pressure from a private equity partner, lenders and the IT department for pushing him to take an extreme step. The letter read "I am solely responsible for all mistakes. Every financial transaction is my responsibility. My team, auditors and senior management are totally unaware of all my transactions."