Rare ARC seeks to aggregate Coffee Day Global loans

Rare Asset Reconstruction Company (ARC) is preparing to aggregate loans of Coffee Day Global with the aim to emerge as majority lender, said people aware of the development. It is the unlisted company that operates Cafe Coffee Day (CCD) chain.

The ARC has offered to make upfront payments of 60-65% of the outstanding dues, the people cited above said.

Last week, Rare ARC concluded a loan purchase transaction with RBL Bank whereby it acquired ₹110.4 crore loan of Coffee Day Global for ₹68 crore at an uncontested Swiss challenge auction. It is likely to close one more transaction this quarter, said one of the persons cited above. Rare ARC declined to comment on the development.

The CCD operator has ₹960 crore debt as on March 2022. This includes bank loans and inter-corporate deposits of ₹119 crore Tanglin Development Ltd, a group entity. The other lenders include Rabobank International, Deutsche Bank, Yes Bank, Kotak Mahindra Bank, IndusInd Bank and Karnataka Bank, according to the company’s annual report for FY22.

Coffee Day Global is a subsidiary of listed Coffee Day Enterprises Ltd, promoted by the late V G Siddhartha, who committed suicide in 2019.

The move to acquire loans by the ARC comes at a time when the company is undergoing corporate insolvency. This, however, will not impact the insolvency process because the Insolvency and Bankruptcy Code and the banking regulations do not restrict banks from selling distressed loans to ARCs during Insolvency proceedings.