Tea Producer McLeod Russel India Gets $157 Million Takeover Bid
Carbon Resources Pvt. has offered to pay off McLeod Russel India's lenders as part of a debt-resolution plan submitted in the tea-grower's insolvency case.
(Bloomberg) -- Debt-laden McLeod Russel India Ltd., one of the country’s largest tea producers, has received a $157 million takeover offer after an electrode-paste maker picked up about a 5% stake even as its lenders try to hammer out a debt-resolution plan.
In the letter of intent sent to creditors handling McLeod Russel’s insolvency proceedings, the potential acquirer Carbon Resources Pvt. Ltd offered to pay off the tea-grower’s lenders.
“The stake that we have picked up now is only to show an intent that we are interested in the company,” Abhinav Jalan, director at Kolkata-based Carbon Resources, said. “As per our offer, secured lenders will be paid in full along with interest, while unsecured lenders will be paid 55% of their dues.”
The tea producer had defaulted on the repayment of principal and interest to lenders, including the State Bank of India, Punjab National Bank, and ICICI Bank Ltd., among others. The bankers will take a call on the offer made by Carbon Resources at a joint lenders’ meeting likely on Thursday, Jalan said.
Shares of McLeod Russel, which produces over 73 million kilograms (161 million pounds) of tea annually, jumped by a maximum permissible 10% on Wednesday continuing the rally sparked by the potential takeover. The Kolkata-based tea firm has gained almost 70% in the past week, handily outperforming the BSE Small Cap Index that has dropped during the same time.
The company has in the past sold off some tea gardens to pay off lenders. An email sent to the tea producer seeking comment about the latest developments wasn’t immediately answered.
For Carbon Resources, a takeover would help it diversify into tea and add scale, Jalan said.
“It is a fair and lucrative offer,” Jalan said. “We plan to have a clean, one-shot resolution for McLeod Russel, and that is what we have offered.”
(updates share price)
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