After selling off debt struck-Vishal Retail to the Texas Pacific Group (TPG) and the Chennai based-Shriram Group, Vishal Retail’s founder Ram Agarwal has registered a company under the name of V2 Conglomerate in Kolkata with his son and cousin as directors. There are four company-owned stores which will remain with Vishal Retail, according to the deal struck with Texas Pacific. The retail chain had run into trouble during the economic downturn in 2008 due to excessive expansion after its successful IPO in 2007. It accumulated debt to the tune of Rs 730 crores, which forced its lenders to go in for a corporate debt restructuring process.
At the time Texas Pacific agreed to infuse Rs 500 crores, it put in a condition that Vishal Retail would transfer all its fixed assets to a special purpose vehicle that will be predominantly owned by the foreign private equity firm. Once the assets are parked in the SPV, TPG will run the business under a wholesale cash-and-carry entity because present regulations do not allow foreign direct investment in multi-brand retail companies. TPG will hold an 82 per cent stake in the proposed SPV while the balance equity will be held by lenders such as State Bank of India, HDFC, Bank of India, HSBC, among others.
TPG Capital is putting together a team to run Vishal Retail once its takeover of the firm is complete. More than a dozen people from human resources, merchandise, finance and other areas have either come on board or are in the process of joining. Late last month, lenders involved in restructuring Vishal Retail’s debt of Rs 730 crores approved a revised offer from TPG to take over the assets of the retail chain. TPG has apparently agreed to bring in Rs 200 crores as the first installment payment towards the working capital of Vishal Retail. The CDR committee will now issue the final letter of approvals to all stakeholders for their final endorsement.
Lenders including State Bank of India, HDFC Bank and ING Vysya Bank are part of the CDR. The economic slowdown that hit the country in late 2008 dealt a crippling blow to Vishal Retail, one of India’s largest discount store operators. Its woes mounted with rising debt and hundreds of crores worth of goods lying unsold in shops and warehouses. Last year, Vishal Retail’s main lenders agreed on a debt recast, following the firm’s inability to service its debts. The assets and liabilities of Vishal are to be transferred to the wholesale company on a slump sale basis and Vishal Retail will cease to exist after the deal and would hold no stake in the new company. Vishal Retail is probably the first listed Indian retailer to sell out in the wake of the global economic meltdown.
Lenders to debt-ridden Vishal Retail came to a conclusion to accept investment firm Texas Pacific Group’s (TPG) proposal to acquire the retail outfit, putting Future Group out of the race. The move came after TPG agreed to offer some more money to the lenders. According to one of the secured lenders, the company has been given exclusivity in lieu of improving the deal by Rs 10 to Rs 20 crores.
At the time Texas Pacific agreed to infuse Rs 500 crores, it put in a condition that Vishal Retail would transfer all its fixed assets to a special purpose vehicle that will be predominantly owned by the foreign private equity firm. Once the assets are parked in the SPV, TPG will run the business under a wholesale cash-and-carry entity because present regulations do not allow foreign direct investment in multi-brand retail companies. TPG will hold an 82 per cent stake in the proposed SPV while the balance equity will be held by lenders such as State Bank of India, HDFC, Bank of India, HSBC, among others.
TPG Capital is putting together a team to run Vishal Retail once its takeover of the firm is complete. More than a dozen people from human resources, merchandise, finance and other areas have either come on board or are in the process of joining. Late last month, lenders involved in restructuring Vishal Retail’s debt of Rs 730 crores approved a revised offer from TPG to take over the assets of the retail chain. TPG has apparently agreed to bring in Rs 200 crores as the first installment payment towards the working capital of Vishal Retail. The CDR committee will now issue the final letter of approvals to all stakeholders for their final endorsement.
Lenders including State Bank of India, HDFC Bank and ING Vysya Bank are part of the CDR. The economic slowdown that hit the country in late 2008 dealt a crippling blow to Vishal Retail, one of India’s largest discount store operators. Its woes mounted with rising debt and hundreds of crores worth of goods lying unsold in shops and warehouses. Last year, Vishal Retail’s main lenders agreed on a debt recast, following the firm’s inability to service its debts. The assets and liabilities of Vishal are to be transferred to the wholesale company on a slump sale basis and Vishal Retail will cease to exist after the deal and would hold no stake in the new company. Vishal Retail is probably the first listed Indian retailer to sell out in the wake of the global economic meltdown.
Lenders to debt-ridden Vishal Retail came to a conclusion to accept investment firm Texas Pacific Group’s (TPG) proposal to acquire the retail outfit, putting Future Group out of the race. The move came after TPG agreed to offer some more money to the lenders. According to one of the secured lenders, the company has been given exclusivity in lieu of improving the deal by Rs 10 to Rs 20 crores.
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