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Debt-struck Koutons in talks to shed 15%

23 Dec 2010 Evaluate

Debt-laden retailer Koutons is considering selling up to 15% stake to raise cash to pay down excessive debt and revive its flagging fortunes. A few private equity funds, such as TPG Capital and Banyan Tree Finance, and a Mumbai based apparel company are in talks with the promoters for the deal.

The company is also in talks with lenders to recast its debt in line with the current business environment. The proposed stake sale, which will happen through the issue of fresh shares, will reduce the promoters’ stake to 27%, on the expanded capital base, from 32%.

Koutons, which went public in 2007, raised long-term debt from a consortium of banks led by Indian Overseas Bank two years ago to take advantage of the then booming sector. Koutons’ total debt of about 660 crore carries an average cost of 14%. Some interest payments have been delayed due to slack first-quarter sales, but no bank has stopped operation of its accounts.

Peers
Company Name CMP
Welspun Living 130.25
Vardhman Textiles 590.10
Arvind 382.55
K.P.R. Mill 930.45
Page Industries 37647.00
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