In a breather for the BM Khaitan Group, the Calcutta High Court today lifted its temporary injunction on the sale of assets by group companies McLeod Russel and Eveready Industries.
Eveready has been monetising land parcels and McLeod has been selling tea estates to pare their debts. It was also understood that Eveready was in talks with battery makers, including Duracell, to sell its battery business.
While the earlier order had restrained these companies from further selling any of their assets, the Court’s latest decision has paved the way for both to come up with plans to reduce their debt levels.
Lenders to McLeod have appointed SBI Caps to come up with a debt restructuring plan and LSI Financial was also roped in to find out McLeod’s financial potential to pay off restructured debts if cased the creditors consented to such a move.
Sources however, had said that the creditor’s plan with McLeod not only entails debt restructuring but may also involve further sale of tea estates to raise funds to pay off the lenders.
According to a source close to the development, of the various options being considered is a plan to restructure term loans up to Rs. 800 crore, extending the tenure of repayment and sale of gardens, in a move that could yield Rs. 200-400 crore.
Also, other professionals involved in coming up with a restructuring plan believe it would have been too hard for McLeod to pay off its debts of around Rs 1,700 crore without further sale of gardens.
LSI has already submitted its preliminary report to the lenders and is awaiting a report from SBI Caps, based on which, it will submit the final draft.
The earlier injunction of the High Court prevented McLeod from selling its tea estates, due to which it would have been hard for both, the lenders and the company to come up with a resolution plan outside the scope of NCLT.
On the other hand, Eveready has been selling its vacant land parcels to pare its Rs 500 crore debt and sources said the firm is scouting for a strategic buyer for its battery business. Both these measures were being impacted by the earlier injunction.
Amritanshu Khaitan, managing director at Eveready said the Court’s order has no impact on the operations or day-to-day business of the company.
Sources said while the battery maker has been in talks with prospective buyers, Eveready would retain its high-margin lighting and appliances business.
“I cannot comment on any market speculation”, Khaitan said.
In the course of hearing an appeal from IL&FS against Williamson Magor & Co, a BM Khaitan Group company, the High Court had restrained group firms Williamson Magor, McLeod and Eveready from transferring, alienating, or encumbering any of their tangible or intangible assets. Both Eveready and McLeod had contested that they aren’t party to the case.
Source: Business-Standard