Mcleod Russel share price surges over 5% as banks transfer loan accounts to NARCL; check key details

The Swiss challenge auction for the debt transfer of the base value of ₹700 crore received no counterbids against NARCL’s offer due to extremely poor sentiments about the tea sector, a merchant banker official involved in the transaction said.

At 11:46 AM, shares of McLeod Russel were trading 4.98% higher at ₹32.03 apiece on the National Stock Exchange. Its total market capitalisation stood at ₹334.57 crore.

The ₹700 crore debt deal is seen as significantly lower than a previously attempted one-time settlement (OTS) of ₹1,030 crore backed by Carbon Resources, which lapsed due to a lack of consensus among lenders.

McLeod officials stated that the development is a positive step that will allow the company to negotiate with only three debtors—NARCL, JC Flowers ARC, and IndusInd Bank—rather than a dozen banks.

As of June 30, 2024, McLeod Russel had total outstanding dues of ₹1,461.06 crore, including debt assigned to another private asset reconstruction company and IndusInd Bank, which are not part of this transaction.

NARCL is expected to work closely with the existing management to restructure the company. However, no immediate comments were available.

The company’s loans were classified as non-performing assets (NPAs) in October 2019 due to financial stress arising from a prolonged downturn in tea prices, rising costs, and unrecovered loans extended to group entities, notably McNally Bharat Engineering Co Ltd, which is undergoing insolvency proceedings.

McLeod Russel, promoted by the Khaitan family, operates 31 tea estates in Assam and two in West Bengal, with a saleable production of 39.19 million kg in FY24 and a workforce exceeding 50,000 employees.