High court lifts stay on sale of Eveready and Mcleod assets

Coming as a breather for the BM Khaitan Group, the Calcutta High Court has 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 dry-cell business.

While the earlier order had restrained these companies from further selling any of their assets, the high court’s latest order has paved the way for both of these firms to come up with plans to reduce debt.

Lenders to Mcleod have appointed SBI Caps to come up with a debt-restructuring plan and LSI Financial was hired to find out Mcleod’s financial potential to pay off restructured debts if the creditors consent to it.

Sources, however, had said 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 mulled, is the plan to restructure term loans up to ~800 crore, extending the tenure of repayment and sale of gardens, which could yield between ~200 crore and ~400 crore. Also, other professionals involved in coming up with a restructuring plan are of the view that it would have been too hard for Mcleod to pay off its debts of around ~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 that it will submit the final draft. The earlier injunction of the high court was preventing Mcleod from selling its tea estates and thus it would have been hard for the lenders as well as the company to come up with a resolution plan outside the scope of the National Company Law Tribunal. On the other hand, Eveready has been selling its vacant land parcels to reduce its debt level of ~500 crore as well as considering sale of the battery business.

Amritanshu Khaitan, managing director at Eveready, said the high court’s order had no impact on the operations or day-to-day business of the company.