The Tata Group had offered to buy the Coffee Day Group's beverage vending machine business as the CCD business has hit a roadblock with two lenders to the struggling coffee chain blocking the deal till their debts are cleared.
“The deal requires NOC from 14 lenders of CDGL. Most of them have in-principle agreed to grant NOC, except Rabobank and Yes Bank. These are the two of the largest lenders, and the coffee vending business, and a few other assets of CDGL, were collateralized with them for the loan that is worth at least ₹300 crore,” said one of the people.
Rabobank and YES Bank, who lends to Coffee Day Global Ltd (CGDL), have demanded repayment of their entire dues for granting a no-objection certificate (NOC) to the proposed deal, the people said on condition of anonymity. CDGL, a unit of publicly traded Coffee Day Enterprises Ltd, runs the Café Coffee Day (CCD) outlets.Tata Consumer Products Ltd, which owns the Tetley Tea and Tata Salt brands, has proposed to buy the coffee vending business from CGDL for at least Rs 1,000 crore. A Tata Consumer spokesperson declined to comment on the developments but said “the company evaluates various opportunities on an ongoing basis”. A YES Bank spokesperson declined to comment.
“We respect the confidentiality that Rabobank clients are counting on and normally do not comment on an existing or non-existing business link with specific companies, and will not elaborate nor specify proceedings or possible deals concerning individual clients,” said a Rabobank spokesperson from Utrecht, Netherlands.
The dues to be repaid by CDGL are worth close to Rs.100 crore to YES Bank and Rs 200 crore to Rabobank, said this person. Karnataka Bank is the largest Indian lender to CDGL, with a loan of Rs 175 crore.
“YES Bank’s loan was a conventional term loan, and the Rabobank loan was in the form of ECB (external commercial borrowing). But since these lenders have the coffee vending business itself as collateral, they can dictate more than the other 12 lenders on NOC for this deal,” say source close to the company.