 "tea producer McLeod Russel")
The country’s largest bulk tea producer, McLeod Russel India, announced on Thursday that it was selling its Vietnam unit, Phu Ben Tea Company (PBTCL).
In a filing with the stock exchanges, McLeod Russel stated that pursuant to a Capital Contribution Agreement executed on October 25, 2023, between Borelli Tea Holdings (BTHL), a wholly-owned subsidiary, and PBTCL, a step-down subsidiary, and Vietnam’s TLK Agriculture Joint Stock Company, BTHL would sell 100 percent of the capital contribution in PBTCL to TLK at a net consideration equivalent to $2.15.
Subject to the completion of the sale, PBTCL would cease to be a subsidiary of BTHL and a step-down subsidiary of McLeod Russel. The expected date of completion of the sale is December 24, 2023.
Aditya Khaitan, chairman and managing director of McLeod Russel, could not be reached for comment.
McLeod Russel’s annual report for 2022-23 had mentioned that the performance of Phu Ben had continued to deteriorate. It also noted that BTHL had fully impaired its investment in PBTCL considering the operating losses incurred during the current and previous reporting years, resulting in the erosion of its entire net worth.
During 2022, PBTCL incurred a loss (both pre-tax and post-tax) of $2.91 million, compared to a loss (both pre-tax and post-tax) of $4.51 million in 2021 (the company prepares its accounts calendar-wise).
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Phu Ben is in the business of manufacturing and cultivating tea. In 2022, it produced 0.63 million kg of tea, down from 3.24 million kg in 2021.
The McLeod annual report stated that the performance of PBTCL continued to deteriorate, and the measures taken so far to improve operations have not been successful. The company has been engaged in the monetization of tea stocks and repayment of bank loans. The management is actively considering monetization of the company/assets to reduce liabilities and repay debt, it further added.
McLeod Russel has been focused on debt resolution and has been in discussions with banks for a one-time settlement. In August, it reached an understanding with electrode paste maker Carbon Resources, owned by the Jalans, for the sale of tea estates in Assam to facilitate the OTS payment.
