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Last Updated : Aug 19, 2019 07:16 PM IST | Source:

Coca-Cola deal talks lift Coffee Day Enterprises shares 5%

Coffee Day Enterprises (CDE) owns Café Coffee Day, India's largest cafe chain that operates 1,750 outlets across the country.

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Shares of Coffee Day Enterprises gained on August 19, the first time in 17 trading sessions, after a media report said that the promoters were likely to resume talks with Coca-Cola for a stake sale in Cafe Coffee Day chain to cut the debt.

In fact, the stock traded high for first time after the shock death of founder VG Siddhartha, whose body was found on the banks of the Netravati river in Karnataka on July 31, two days after the 60-year-old businessman had gone missing.

The stock was locked in 5 percent upper circuit at Rs 66.05 on the BSE. It was in lower circuit for previous consecutive 12 trading sessions after July 29 and lost 68.5 percent in the previous 16 sessions.


"The promoters of the Coffee Day Group plan to restart talks with Coca-Cola for selling a chunk of their stake in the Café Coffee Day (CCD) chain in a bid to cut the group's debt further," The Economic Times reported on August 19.

Siddhartha had begun talks with the beverage giant, seeking a valuation of Rs 8,000-10,000 crore for the company in June but was reluctant to sell a majority stake, the report said.

Coffee Day Enterprises (CDE) owns Café Coffee Day, India's largest cafe chain that operates 1,750 outlets across the country.

The deal will help Coca-Cola get a foothold in the cafe space as it tries to expand beyond its core carbonated drinks portfolio.

The move will help Coffee Day Group reduce debt obligations significantly. The company's debt as on July 31 was Rs 4,970 crore, with the debt incurred by its logistics arm, Sical, accounting for about Rs 1,488 crore.

The group recently sold Global Village Tech Park, under it is real estate arm Tanglin, in Bengaluru to Blackstone Group for about Rs 2,600-3,000 crore.

The total debt position of Coffee Day Group will reduce by Rs 2,400 crore after the payment for the deal is received.

The debt position of the Coffee Day Group (excluding Sical and Magnasoft) post repayment of debt out of proceeds from sale of Global Village will be Rs 1,000 crore in the next 45 days.

Sical Logistics is also looking to sell some of its assets, CDE said in a statement on August 17.


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First Published on Aug 19, 2019 12:03 pm
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