While the promoter group holding, including individual promoter shareholders and group investment firms, stood at 42.71 per cent as on March 31, 2019, it fell to 38.39 per cent on Tuesday. With ABFL’s move, Woodside Parks Ltd, an investment wing of the promoter group, has lost its entire shareholding in this firm.
Earlier this month, in the first tranche of sale of pledged shares of Woodside Parks, ABFL sold 2,142,339 shares at market price to the public, reducing the stakes of the promoter group company from 4.31 per cent to 2.26 per cent. Later another sale followed which reduced its stake holding further to only 0.35 per cent.
However, during May 16-17 this year, McLeod Russel, in a filing with the stock exchanges, declared that ABFL had sold the remaining shareholding of this promoter company as well. “After such sale, we do not hold any shares,” Woodside Parks said in its disclosure to the stock exchanges.
McLeod's has been in troubled waters for a while now. It faced its second credit rating downgrade this month.
While rating agency Icra downgraded the company’s term loans and fund-based bank facilities from ICRA A– to ICRA BBB– with a negative outlook, the non-fund based bank facilities has been revised from ICRA A2+ to ICRA A3.
According to Icra, the rating revisions have factored in further deterioration in McLeod’s liquidity profile due to slower-than-anticipated progress on asset monetisation and continued pressure on the profitability of the company's core tea operations.
Prior to this downgrade, the agency had revised credit rating and outlook on this company on April 2.
Also, pledging of shares by promoters has increased. According to filings with the country’s bourses, around 98.5 per cent of the entire remaining promoter shareholding of McLeod Russel is pledged with the banks and other financial institutions.
In a bid to pare its debt of Rs 1,600 crore, McLeod has been selling estates. So far, it is estimated to have received Rs 940-950 crore from sale of gardens. In the process, it lost its crown of the world’s largest bulk tea producer to Goodricke Group’s parent Camellia Plc.
Sources said a significant part of McLeod’s short-term debt will come up for repayment in the next 3-6 months, which would keep its liquidity position under stress.
As on March 31, 2018, exposure to group companies was about Rs 650 crore and rose to Rs 1,000 crore by March 31, 2019, sources said.
Icra noted that while a majority of the proceeds from the sale of the second tranche of tea estates has been received recently with a delay, McLeod’s overall leveraging remains high. Moreover, its high exposure to weak group firms, including McNally Bharat Engineering, has been largely funded by short-term debt which has further aggravated the tight liquidity position and exposed McLeod to major refinancing risks.
At the end of the day’s trade, the McLeod Russel scrip fell by 2.42 per cent at Rs 30.20 on the Bombay Stock Exchange.