Tea producer Mcleod Russel could soon have a new owner. All you need to know

tea industry

by 5paisa Research Team Last Updated: Dec 09, 2022 - 09:34 am 14.6k Views
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Mcleod Russel India Ltd, one of the oldest tea companies in the country and one of the bigger listed firms, could finally be up for sale. 

Carbon Resources, which had earlier submitted a non-binding letter of intent to lenders of Mcleod Russel to acquire a controlling stake in the debt-laden tea major, is now planning to make a binding proposal, The Financial Express reported.
Carbon Resources and another company, MK Shah Exports, are yet to receive formal responses from the lenders on their offers for Mcleod Russel, the report said.

Why is the entire process taking so long?

The carbon products manufacturer alleged that lenders are “dragging their feet” on its Rs 1,245-crore offer for the troubled company, part of the financially stressed Williamson Magor group, the news report said.

What are the terms of the offer?

According to the offer made in September, Jalans-owned Carbon Resources would infuse upfront equity worth Rs 300 crore and a debt of Rs 945 crore to resolve Mcleod’s outstanding debt. Secured lenders would be paid in full, while unsecured lenders would have to take a 45% haircut as the Jalans proposed to take over the company.

Who are the tea company’s major lenders?

The lenders to the teamaker 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. With promoter Khaitans having only a little over 6.2% stake in the company, debt stands at over Rs 1,700 crore.

Does Carbon Resources already own any stake in Mcleod Russel?

Carbon Resources had picked up a 5.03% stake in McLeod Russel from the open market last month. The company said the stake purchase was to show lenders that it was keen to acquire the company, which currently has 31 gardens in Assam and two in Dooars in West Bengal.

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