New Delhi: The decks were cleared for the US-based TPG Capital Lp to acquire the assets of discount retailer Vishal Retail Ltd after the lenders involved in its corporate debt restructuring (CDR) approved the private equity (PE) firm’s revised offer, two people close to the situation disclosed.
The CDR meeting was held in Mumbai on Monday. The shareholders will have to endorse the TPG bid for the deal to be formally inked.
TPG’s new offer did not effect any substantial changes. Earlier, the banks involved in the CDR process, including State Bank of India, HDFC Bank Ltd, Hongkong and Shanghai Banking Corp. Ltd and ING Vysya Bank Ltd, among other lenders, had granted a three-week period for TPG to submit a revised offer, failing which they would open the bid to rival bidders.
Last month, Kishore Biyani’s Future Group had signalled interest in acquiring Vishal Retail. In response, TPG sought to hurry through the deal, but the bankers prevented this as they wanted to study Biyani’s plan as well.
A meeting was then held in New Delhi on 27 July, when the bankers granted TPG the privilege of a three-week exclusivity agreement to come up with a revised proposal. On Sunday night, the bankers agreed on TPG’s revised proposal and agreed to transfer the assets of Vishal Retail to the PE firm. TPG’s director Amol Jain and Vishal’s promoter Ram Chandra Agarwal both declined to comment.
The next step for Vishal and TPG is to call a meeting of shareholders to seek their support for the plan. Also, the firm will have to approach Delhi high court to vacate a stay that bars Vishal from selling any of its assets before 25 November, which the court has set as the next date of hearing into a winding-up petition filed by Singapore’s DBS Bank Ltd. DBS is not a part of CDR and has taken the legal route to recover its dues from Vishal.
The latest move finally puts an end to months of talks between TPG and the lenders to take over the cash-strapped retailer after it fell on bad times due to the economic slowdown.
Since India’s laws don’t allow foreign companies and funds to own retail ventures in the country, TPG will convert Vishal Retail into a cash-and-carry entity to comply with the rules. Such entities have no bar on overseas ownership.
The key lenders to Vishal Retail agreed to the debt recast even as TPG was in talks for taking over the firm. Its total outstanding debt is Rs730 crore.