Is ailing Subhiksha up for sale?
Feelers Sent To Large Retailers Like Reliance, Birla For Possible Buyout Namrata Singh, Amrita Nair-Ghaswalla & Rajesh Chandramouli | TNN Mumbai/Chennai: Is Subhiksha on sale? It is believed that a chunk of equity from the Chennai-based, cashstrapped retail chain — which is in immediate need of Rs 300 crore — is on the table and the search is on for either a strategic buyer or a financial investor. The company recently qualified as an eligible candidate for corporate debt restructuring (CDR). TOI has learnt from various industry sources that feelers have been sent to almost all large players operating in the various retail formats for a possible buyout of Subhiksha. Companies like Aditya Birla Retail, Reliance Retail and the Future group, among others, are likely to have been approached at different times. Industry sources said investment bankers have been making the rounds of various companies in Mumbai and trying to hawk a substantial equity in Subhiksha. However, it is not known who appointed these bankers — the company promoters, other existing investors, lenders or whether they are fishing for a mandate independently. But, the deal does not look like it'll get closed in a hurry. The reason is finding genuine interested buyers in the current economic slowdown might not be that easy. Also, prospective buyers will have to contend with a couple of issues. One, there are liabilities involved and buyers would want a clear idea of the burden that awaits them. Also, Subhiksha's model of deep discount retailing is unique and the bidder has to figure out if it dovetails with his existing operations. Then, of course, is the issue of whether the acquirer would want to invest partially or is interested in a complete buyout. R Subramanian, MD, told TOI: ''On equity, the approach is to take a look at this post the CDR approval. The first right of refusal would be with existing investors. Of course, if there is a spillover, it can go to a new investor.'' The founder said that since Subhiksha is working on CDR package with existing lenders, the company does not see the the current debt drought affecting their package. Subramanian also expects that the loans would be coming out of existing banks. When asked whether he was open to the idea of a new investor who could end up owning a substantial stake, he said: ''We need the company to survive and thrive. Issues of relative ownership, are immaterial. We are not so bad that personal ego is ahead of the business. One does see investor as necessary, but if necessary, our personal interest will never be put ahead of this.'' Sources said that whatever be the changed structure, Subramanian would continue at the helm. * ICICI Pru in a fix **Reeba Zachariah & Madhu T | TNN *Mumbai: Subhiksha's cash-starved situation has put ICICI Prudential in a tight spot. The fund house has a Rs 75-crore exposure to the company. According to the fund house's latest fact sheet, its two close-ended diversified equity schemes ICICI Prudential Fusion Fund and ICICI Prudential Fusion Fund-Series II — have invested around Rs 75 crore in the retail company. The schemes have an exposure of 8.54% and 9.61% respectively of their corpus in the unlisted firm. The asset management firm invested Rs 75 crore in June 2007 by buying part of ICICI Venture's stake in Subhiksha. The retailer was valued at Rs 1,500 crore at that time. ICICI Prudential said that it doesn't comment on stock specific events. However, sources added that ICICI Prudential, ICICI Ventures (holds 23% stake) and Azim Premji Investments (10%) and various foreign and Indian lenders are believed to be working together to find a solution. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
