Coffee Day Enterprises hits 5% lower circuit as lenders invoke promoters' pledged shares

Shares of Coffee Day Enterprises (CDEL), owner of cafe chain Cafe Coffee Day (CCD), tumbled as much as 5 per cent in intraday trade on the Bombay Stock Exchange (BSE) on Wednesday after lenders of the company invoked 5.24 per cent of promoter's pledged shares between August 1 to 27.

According to latest data available with exchange, Edelweiss and Indusind Bank, the lenders to troubled Gonibedu Coffee Estate, invoked entire 5.24 per cent of the CDEL shares, the promoter company had pledged with them.

As of June 30, 2019, Gonibedu Coffee Estates held 5.24 per cent, or 1.10 crore, shares in CDEL and pledged shares on various loans and mortgages amounting to 78.94 per cent of its holding.

Edelweiss has invoked 87.39 lakh shares, followed by Indusind Bank with 23.32 lakh shares in August 2019.

In the past one month, lenders have been invoking CDEL pledged shares after the sudden demise of Coffee Day Enterprise MD and Chairman VG Siddhartha, whose body was found on the banks of the Netravati river in Karnataka on July 31, two days after the businessman had gone missing.

Also Read: VG Siddhartha's debt pile may have peaked at over Rs 11,000 crore, new data unravels

The stock has been on selling spree and has fallen as much as 65.38 per cent since July 26, 2019, two days prior to Siddhartha's disappearance, from Rs 195 to Rs 67.50 as on September 3. The scrip hit an all-time low of Rs 62.95 on August 16.

Data from stock exchanges and Ministry Of Corporate Affairs' filings have revealed that deceased Cafe Coffee Day promoter VG Siddhartha may have been under an enormous debt pile of up to Rs 11,000 crore. While listed firm Coffee Day Enterprises reported a debt of Rs 6,547 crore on 31 March, 2019, data from Siddhartha and promoter group's 4 private holding companies revealed they had outstanding pledges worth Rs 3,522 crore as of fiscal 2018-19.

Also Read: Infographic: Cafe Coffee Day Founder VG Siddhartha's Troubles That Ended in Tragedy

Data from four promoter companies - Devadarshini Info Technologies, Coffee Day Consolidations, Gonibedu Coffee Estates, and Sivan Securities - revealed they raised funds by mortgaging shares held in the listed company Coffee Day Enterprises between 2014 and 2019. These companies had combined shareholding of 17.13 per cent in CDEL.

Last month, the company in an exchange filing presented a breakup of debts held by its subsidiaries which came to a total of Rs 4,970 crore. This includes Rs 4,796 crore in secured loans and Rs 174 crore in unsecured loans. The company had expressed confidence that the ongoing divestment transactions will reduce the debt position of Coffee Day Group. The company also appealed to its lenders and creditors to give it sufficient time to honour its repayment obligations.