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TPG miffed with Vishal Retail’s revised proposal to Future Group

TPG miffed with Vishal Retail’s revised proposal to Future Group
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First Published: Mon, Aug 09 2010. 10 45 PM IST

Slowdown woes: Vishal Retail’s Ram Chandra Agarwal. Harikrishna Katragadda / Mint
Slowdown woes: Vishal Retail’s Ram Chandra Agarwal. Harikrishna Katragadda / Mint
Updated: Mon, Aug 09 2010. 10 45 PM IST
New Delhi: Even before the end of the three-week period of negotiations granted exclusively to TPG Capital Lp by banks involved in a corporate debt restructuring (CDR) of Vishal Retail Ltd, differences have cropped up between the troubled retailer and the US-based private equity firm.
Slowdown woes: Vishal Retail’s Ram Chandra Agarwal. Harikrishna Katragadda / Mint
Two people familiar with the talks say TPG is upset with Vishal Retail’s promoter Ram Chandra Agarwal because he has written a letter to the lenders supporting a bid from Kishore Biyani’s Future Group even as TPG has been given three weeks—until late August—to come up with a revised proposal to take over the cash-strapped retailer.
Currently, Vishal Retail’s lenders including State Bank of India, HDFC Bank Ltd, Hongkong and Shanghai Banking Corp. Ltd and ING Vysya Bank Ltd are involved in the debt recast and looking for a buyer for the retailer.
Prior to that, Agarwal in a letter to the bankers supported TPG’s bid ahead of a crucial bankers’ meeting on 27 July in New Delhi. The letter supporting Biyani came barely four days after the banks gave TPG three-week exclusivity, one of the persons said.
The two persons, who asked not to be identified, said though Agarwal’s letter does not carry much weight as it is up to the banks to finally decide on the fate of the deal, his latest communique does create tensions between the company’s promoter and TPG.
Biyani said since TPG has got a three-week exclusivity from the bankers, his group is not in any discussion for Vishal Retail at this juncture.
“The banks have to decide and I don’t come in the picture unless the (TPG) deal falls through,” said Biyani, who is CEO of Future Group, which operates the country’s largest listed retail company Pantaloon Retail (India) Ltd. “I am not in the race right now.”
Amol Jain, director at TPG, said he would not comment on the matter. Vishal spokesperson Manmohan Sharma said the two sides were still talking to each other. “We’ve signed a MoU (memorandum of understanding) with TPG and we are progressing on that,” Sharma said, declining to comment on the specifics.
In June, Vishal Retail’s board had approved a non-binding and non-exclusive agreement for talks with TPG and the private equity firm was the sole candidate to take over Vishal Retail before Biyani entered the fray.
In late July, Vishal Retail and TPG came close to signing a hurriedly organized deal to stave off Biyani, but banks involved in CDR said they wanted to study Future Group’s proposal first before giving a Vishal Retail-TPG deal a go-ahead. The two persons mentioned above said TPG is still keen for a deal despite the latest developments.
Once among the most aggressive modern retailers in India, Vishal Retail has fallen on hard times after the economic slowdown of 2008.
Vishal Retail is trying to find its feet again after the slowdown left it saddled with Rs730 crore in debt and hundreds of crores worth unsold inventory.
The firm operates 117 discount stores in several cities. On Monday, Vishal Retail stock jumped 9.93% to Rs62 on speculation of a deal in the offing. The Sensex rose 0.79% to 18,287.50 points.
divya.g@livemint.com
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First Published: Mon, Aug 09 2010. 10 45 PM IST
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