Brickwork Ratings assigns BWR A+ (SO) rating to Coffee Day Resorts Pvt. Ltd's NCD issue

Brickwork Ratings (BWR) has assigned BWR A+ (SO) (Pronounced BWR A plus Structured Obligation) (Outlook: Stable) Rating for Coffee Day Resorts Pvt Ltd.'s(CDRPL)proposed structured secured NCD Issue of INR 60 crores with a tenor up to 36 months. 'BWR A+ (SO)' stands for an instrument that is considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.

BWR has essentially relied upon the audited financial results of CDRPL for FY2011 and provisional financial results for nine months ending Dec 2011, draft term sheet of transaction, and clarification provided by the issuer.

The rating factors, inter alia, the brand identity of Café Coffee day group, its professional management team, high net worth of promoter and the underlying security coverage package of the proposed NCD issue. However, the rating is constrained by the fact that historically CDRPL does not have adequate cash flows to service debt and high contingent liabilities.

The proceeds of the NCD/Loan Facility issue will be used by CDRPL to enhance its stake in Amalgamated Bean Coffee Trading Company Limited (ABCTL).

CDRPL is a privately held company of the Cafe Coffee Day group (CCD). The CCD group has several other businesses in the consumer and infrastructure sectors. Cafe Coffee Day is a division of India's largest coffee conglomerate, the ABCTL. With Asia's second-largest network of coffee estates (10,500 acres) and 11,000 small growers, Coffee Day has a rich and abundant source of coffee. The Promoter Mr V G Siddharth and his family hold approximately 71.4% stake in CDRPL, around 10.7% each is held by KKR and NSR partners, and 7.14% is held by Standard Charted Private equity.

The Company proposes to issue Secured Structure redeemable NCD of INR 60 Cr with tenure upto36months. The Facility is secured by way of security cover/ collateral of 2.2x pledge of equity shares of Mindtree Ltd., Sical Logistics Ltd. and ABCTL and by the personal guarantee of the promoter. The issuer has also to place one quarter's interest in a deposit lien marked to the Trustee at all times until maturity.

Source : Equity Bulls

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