Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Companies / News/  S Kumars plans Reid and Taylor share sale
BackBack

S Kumars plans Reid and Taylor share sale

The money will be used to pay off the company’s debt, say people familiar with the development

SKNL had planned to list its Reid and Taylor business in 2010. The `1,000 crore IPO seems to have met with hurdles owing to high debt on the books of other businesses of SKNL apart from Reid and Taylor. Photo: Pradeep Gaur/Mint (Pradeep Gaur/Mint)Premium
SKNL had planned to list its Reid and Taylor business in 2010. The `1,000 crore IPO seems to have met with hurdles owing to high debt on the books of other businesses of SKNL apart from Reid and Taylor. Photo: Pradeep Gaur/Mint
(Pradeep Gaur/Mint)

New Delhi: S. Kumars Nationwide Ltd (SKNL) plans to raise about 600 crore by selling shares of its Reid and Taylor (India) Ltd unit through a qualified institutional placement (QIP), having put its initial public offer (IPO) plan on the back burner, according to three investment bankers familiar with the development. The money will be used to pay off the company’s debt, said one of the three people on condition of anonymity.

UBS India will advise the company on the transaction. “It is UBS’s policy not to comment on market speculation or rumour," said a UBS spokesperson.

An SKNL spokesman said “plans to revive the IPO will depend entirely on market conditions". He, however, declined to comment on the company’s likely stake sale to a private equity firm and the plans of raising money through QIP or any other method. “We would not like to comment on market rumours," he said.

SKNL had planned to list its Reid and Taylor business in 2010. The 1,000 crore IPO seems to have met with hurdles owing to high debt on the books of other businesses of SKNL apart from Reid and Taylor, said one of the people cited above.

The consolidated debt of the S. Kumars group stood at 4,262.93 crore as on 31 March, up 26% from a year earlier, according to financial data provider Capitaline published by Capital Markets Publishers Pvt. Ltd.

SKNL’s debt-to-equity ratio stands at 1.83% for fiscal 2012, much above its peers. Pantaloon Retail (India) Ltd’s debt-to-equity ratio as on 31 December stood at 0.98% while that of Shoppers Stop Ltd was 0.18% as on 30 September.

“The company (SKNL) is no longer looking at IPO for Reid and Taylor as the debt pile-up is massive on account of SKNL’s US subsidiary HMX Acquisition Corp.," the third banker said.

HMX, a formal wear company that was acquired by SKNL in 2009, had filed a petition under Chapter 11 for voluntary capital restructuring in October. HMX had declared bankruptcy and was acquired from the US Bankruptcy Court.

The net loss of HMX during the quarter ended 31 December stood at 10.35 crore, according to a filing by SKNL on BSE. The company, in a statement, attributed the loss to the “sluggish market and tight liquidity situations in the US that were making it difficult for HMX to stay afloat".

“Reid and Taylor is a great asset for SKNL and has been doing well each quarter. The company does not want to let go of the asset so a strategic sale is unlikely. QIP is the best bet today. The promoters have dropped the IPO plans as market conditions are not very robust still and SKNL’s stock has not done very well," said the third banker.

The SKNL stock closed at 8.95 on Friday, down 0.78% while BSE’s benchmark Sensex rose 0.3% to 18,918.52 points.

“It (SKNL) has been waiting to list for quite sometime now but is unable to find an opportune time. In the meanwhile, the economy has only further deteriorated impacting discretionary spends and the retail sector," said Abhishek Ranganathan, vice-president, retail and real estate, Institutional Equity Research, PhillipCapital (India) Pvt. Ltd.

SKNL’s consolidated profit fell 88.5% to 10.45 crore during the December quarter from a year earlier.

According to an Institutional Investor Advisory Services India Ltd report dated 14 January, the promoters have pledged 99.82% of their holding in SKNL.

The first investment banker cited above said SKNL is considering other options to tide over the debt issues, including corporate debt restructuring. He added that the Government of Singapore Investment Corporation (GIC) is considering staying invested in Reid and Taylor. GIC invested 900 crore in Reid and Taylor in 2008 for a 25% stake. According to GIC’s website, the sovereign wealth fund has a 20-year investment horizon.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 03 Mar 2013, 09:15 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie