McLeod Russel asset sale: With Rs 1000 cr debt, firm to sell 6 more tea estates for Rs 232.32 cr

Williamson Magor Group company McLeod Russel India Ltd has announced its fourth tranche of the asset sale. The plantation company has signed the agreement with two Kolkata-based non-tea firms to sell a total of six tea estates in the Dooars and Assam for a total consideration of Rs 232.32 crore.

With this, the company will be able to raise around Rs 795.52 crore through its sale of 22 tea estates spread across the Dooars and Assam with an annual yield of about 23.77 million kilogram (mkg). The company initially had a target to raise Rs 500-600 crore through asset sale to pare down its debt.

McLeod Russel had a debt of around Rs 1,000 crore prior to the asset sale.

In a regulatory filing late Saturday evening on BSE, McLeod Russel said it has signed a non-binding agreement with Saffron Enclave Pvt Ltd for selling off its four assets— Addabarie, Dirai, Rajmai and Mahakali Tea Estate— for Rs 180.7 crore.

The tea gardens are in Sonitpur, Sibsagar, Dibrugarh and Tinsukia districts of Assam, with a total annual yield of around 5.07 mkg, and sold at a valuation of Rs 356 per kg. Sameer Agarwal of IndusInd Bank has advised McLeod Russel on the deal with Saffron Enclave.

The directors of Saffron Enclave Ankit Saraiya and Avantika Gupta are non-executive directors of publicly-listed Techno Electric and Engineering Co Ltd and other Techno Group companies.

Both Saraiya and Gupta are also on board of privately-held Simran Wind Project Ltd, the company in which Techno Electric is getting merged into.

McLeod Russel has also signed a memorandum of understanding with Civil Engineers Enterprises Pvt Ltd, owned by Shyamalendu Ghosal and family, to sell off Chuapara and Jainti Tea Estate in the Dooars for a total sum of Rs 51.62 crore. The Jainti Tea Estate also includes Chuniajhora Tea Estate, produce of which is processed at Jainti tea garden. The total production from these two gardens is 2.5 mkg, implying the gardens were sold at a valuation of Rs 207 per kg.

Interestingly, both Civil Engineers and Saffron Enclave are non-tea companies with a major interest in construction and engineering. Williamson Magor Group, too, has an engineering interest McNally Bharat Engineering, and the group is looking to bring in a strategic investor for the debt-ridden engineering firm, chairman Aditya Khaitan told DNA Money.

Meanwhile, McLeod Russel has been looking to trim its tea assets in Assam and the Dooars. Khaitan, the company’s vice-chairman and managing director, during its annual general meeting (AGM) last month said that the company may exit 10-20 million kg in terms of tea gardens where the yield is low.

The company has taken shareholders’ approval in its AGM to sell additional tea estates after it sold 12 tea gardens to M K Shah Exports Ltd and Luxmi Tea Co Pvt Ltd. According to the company, shareholders approval is required in case of a sale, lease or otherwise requisite disposal of certain tea estates having value in excess of 20% but not exceeding 35% of the value of its fixed assets.

“We have achieved our target of asset sale. There is no further asset lined up,” Kamal Baheti, whole-time director and chief financial officer of McLeod Russel said.

In June, the company agreed to sell eight tea estates to M K Shah Exports for Rs 331 crore and four tea garden to Luxmi Tea for Rs 141 crore. Last week, it signed an agreement with Goodricke Group Ltd to sell two tea gardens in Assam with a combined yield of 2.5 mkg for Rs 91.2 crore.

Source: DNA Money