Promoter stake in Cox & Kings down to 39% over payments default

The promoter stake in travel services company Cox & Kings has reduced 10 percentage points, to 39.73 per cent, with its lenders having invoked pledged shares.

This came in the wake of the default on commercial paper payments and rating downgrades in recent weeks.

The 260-year-old entity is owned by the Kerkar family, through various domestic and foreign-based entities. The promoters held 49.8 per cent stake in the company as of March 31; by end-June this had reduced to 39.73 per cent, the firm said in a stock exchange notification. A little over 69 per cent of the promoter shareholding was pledged as of end-June, up from 63 per cent at end-March, when the debt was Rs 3,238 crore.

Cox & Kings has been facing a liquidity crisis, leading to default on commercial paper worth about Rs 200 crore. “The promoters had pledged their shareholding against borrowings by promoter companies. The reduction in the shareholding from the March to June quarters is on account of invocation of pledged shares by those lenders,” Cox & Kings said. 

According to stock market regulator norms, promoters are required to disclose details of invocation or release of pledged shares within seven working days of the event. Cox & Kings said the company had made all relevant disclosures without any delay and was in compliance with the regulations. A section of its investors have complained to the Serious Fraud Investigation Office and to the Securities and Exchange Board of India, accusing the company of fund diversion. These complaints were made after a sharp fall in its share price, following the loan defaults.In its response, the firm says it has responded to all investor and lender queries. 

Earlier this month, it had said it was taking all the required measures to resolve a temporary cash flow mismatch. Also, that it was evaluating each of its businesses and identifying ways to improve operational performance.

"The company is focusing on cash flow generation from each business and working at the highest priority to free working capital," it had said. According to a media report, Cox & Kings has appointed Axis Capital as a merchant banker to find investors for some of its units.

The defaults and rating downgrades have had a cascading effect, with other suppliers and the International Air Transport Association refusing credit to it. Its lenders are looking at ways to minimise exposure to the company. The stock is down 90 per cent since January, trading in the lower circuit for a month. On Tuesday, it closed at Rs 15.50.