A definitive agreement for investment in GV Techparks Private Limited which is a wholly-owned subsidiary of group company Tanglin Development Ltd (TDL), has been executed between Coffee Day Enterprises Ltd (CDEL) and entities belonging to Blackstone Group and the Salarpuria Sattva Group at an enterprise value of Rs 2,700 crore.

The deal to bring down the debt level of CDEL

According to a CDEL statement, this transaction is expected substantially bring down the debt level of the group which was earlier disclosed on August 17, as Rs 4,970 crore, CDEL said in a statement. It further stated,  "The rationale for the sale is to focus on its core business and reduce the debt of Coffee Day Group"

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According to a media report, the transaction is proposed to take place in two tranches. The first tranche that is expected to be completed on or before October 31, will be worth Rs 2,000 crore and the subsequent tranche is expected to be of Rs 700 crore.

The completion of the transaction, however, depends on the transfer of Global Village TechPark asset from TDL to GV Techpark. The transaction which is at an enterprise value of Rs 2,700 crore, is subject to certain closing adjustments.

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Additionally, the closing of the transaction is also subject to completion of conditions precedent including receipt of regulatory approvals, CDEL said. This deal happens to be the first major divestiture by CDEL. The company has also been in talks to sell its logistics subsidiary Sical and flagship retail business Cafe Coffee Day. The deal is reportedly being stuck through a special purpose vehicle. Blackstone is expected to own 80 per cent part in the deal while the remaining will be taken up by Salarpuria.

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CDEL has been in trouble after founder's death

The company has gone down the tough road and has been in trouble after its founder V G Siddhartha allegedly took his own life owing to debt strains in his company. Since his death, CDEL has been trying to divest its assets to pare debts.

On July 30, CDEL informed stock exchanges about Siddhartha's disappearance. In a letter that was purportedly written by him, the Cafe Coffee Day founder said: "I could not take any more pressure from one of the private equity partners forcing me to buy back shares." 

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(With ANI Inputs)