The company has appointed Axis Capital as its merchant banker to scout for investors. Last month, the company defaulted twice on its commercial papers
Promoters of travel firm Cox & Kings, which defaulted twice last month on its commercial papers, have reached out to potential investors to divest stake and raise capital.
Sources told Moneycontrol that the promoters are willing to divest majority stake as they look to correct the cash flow mismatch that had led to the defaults. The two defaults amounted to Rs 200 crore in total.
The company has appointed Axis Capital as its merchant banker.
"The promoters are looking to divest stakes in some of the units, or could sell one or more of their products. While these are initial days, the company has received interest from some of the biggest names in the private equity space," an executive said.
Promoters, consisting of the Kerkar family, hold 49.8 percent stake in the company. Peter Kerkar is CEO.
One of the units where the promoters could dilute stake is Cox & Kings Global Services: the visa processing arm. Sources said the company could also look to divest its India and international leisure business and also the corporate travel vertical.
The India leisure business includes outbound travel and also the MICE (Meetings, incentives, conferencing, exhibitions) segment.
A well-known brand in the travel space, Cox & Kings has a widespread network across the country, which includes its franchisees, offices and general sales agents.
"The company has a temporary cash flow problem. But getting investors shouldn't be a problem given its legacy," said the executive cited above.
When contacted, the company refused to comment.The defaultsCox & Kings first defaulted on a payment of Rs 150 crore on June 27. A day later, it defaulted on a payment of Rs 65 crore, of which Rs 15 crore was paid.
The defaults were followed by a series of downgrades by rating agencies. After the second default too, Brickworks and CARE Ratings downgraded several of the company's instruments.
In a statement to the bourses late on July 2, it accepted that the working capital situation was "stretched in the last few months and was further impacted due to its inability to replace the short-term loans with long term loans/regular working capital lines."
It added that it is taking "all required measures to resolve the temporary cash flow mismatch," and will be "approaching its lenders to work out some time bound program to meet this emergency."
It is yet not known how much the company plans to raise through the stake sale. Neither has a deadline been set, the executive stated.