Promoters’ shareholding in McLeod Russel declined by 2.05 per cent to 40.66 per cent after Aditya Birla Finance (ABFL) sold 21,42,339 shares through open market at the prevalent market price to the public.
These shares were pledged to ABFL by Woodside Parks, a promoter group company which had a 4.31 per cent stake in McLeod Russel. After the sale, Woodside Parks’ stake in McLeod Russel declined to 2.26 per cent which led to the shareholding of promoters dropping in the company.
In a regulatory filing with the Bombay Stock Exchange (BSE), the company said, “We, being one of the promoters of McLeod Russel India Limited, hereby, disclose that 21,42,339 equity shares of Rs 5 each representing 2.05 per cent of the paid-up share capital of the McLeod Russel have been sold by Aditya Birla Finance Limited. Now, we hold 23,64,462 equity shares representing 2.26 per cent of the paid-up share capital."
On April 30, another promoter group company, Borelli Tea Holdings had pledged its entire 16.34 per cent stake in McLeod Russel to Indusind Bank.
Of the remaining 40.66 per cent promoter stake in McLeod Russel, 35.91 per cent is already pledged or encumbered.
Sources said that a significant part of McLeod Russel’s debt will come up for repayment over the next 3-6 months which would keep its liquidity position under stress. As on March 31, 2018, exposure to group companies was at around Rs 650 crore which increased to Rs 1,000 crore by March 31, 2019, said sources. A major part of this debt is short-term.
McLeod Russel faced its second credit rating downgrade this month. While ratings agency Icra downgraded the company’s term loans as well as fund-based bank facilities from Icra to BBB, with a negative outlook, the rating of non-fund-based bank facilities has been revised from A2+ to A3.
Prior to the downgrade, the ratings agency had revised its credit rating and outlook for McLeod Russel on April 2.
According to Icra, the rating revisions have factored in a further deterioration in McLeod’s liquidity profile due to a slower-than-anticipated progress on asset monetisation and a continued pressure on the profitability of its core tea operations.
The agency reasoned that while a majority of the proceeds from the sale of the second tranche of tea estates have been received with a delay, McLeod’s overall leveraging remains high. Moreover, its high exposure to weak group companies, including McNally Bharat Engineering, has been largely funded by short-term debt which further aggravated the tight liquidity position of McLeod and exposed it to significant refinancing risks.
McLeod Russel has been selling its tea estates to pare debt.