Vishal Retail the saga continues

Friday, 13 August 2010

R C Agarwal, promoter of beleaguered Vishal Retail, has come out in support of the offer from Texas Pacific Group (TPG) over that from Kishore Biyani’s Future Group. Media reports suggest that the lenders, who are finalizing a debt restructuring plan for Vishal, are also expected to opt for TPG, as Agarwal has advised. TPG is expected to sweeten its offer when the lenders proceed with discussion on its proposal.

It may be noted that a few days ago differences had cropped up between Vishal Retail and the US-based private equity firm TPG. TPG was upset with Agarwal because he had written a letter to the lenders supporting a bid from Future Group even as TPG has been given three weeks — until late August — to come up with a revised proposal to take over the cash-strapped retailer. Currently, Vishal Retail’s lenders including State Bank of India, HDFC Bank, Hongkong and Shanghai Banking and ING Vysya Bank are involved in the debt recast and looking for a buyer for the retailer.

Prior to that Agarwal in a letter to the bankers supported TPG’s bid ahead of a crucial bankers meeting on July 27 in New Delhi. The letter supporting Biyani came barely four days after the banks gave TPG three-week exclusivity. However, Biyani denies being in the race. In late July, Vishal Retail and TPG came close to signing a deal to stave off Biyani. But banks involved in CDR said they wanted to study Future Group’s proposal first before giving the Vishal Retail-TPG deal the go-ahead. Once among the most aggressive modern retailers in India, Vishal Retail has fallen on hard times after the economic slowdown. It is trying to find its feet again after the slowdown left it saddled with Rs 730 crores in debt and hundreds of crores worth of unsold inventory. The firm operates 117 discount stores in several cities.

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