Coffee Day shares tumble 29% in 2 days: What's brewing at CCD operator?

Coffee Day Enterprises share price were under pressure for a second day on Tuesday. At 1:20 PM, Coffee Day shares were down 15 per cent at Rs 33.89 per share as against 364 points, or 0.46 per cent, dip in the benchmark BSE Sensex.

In two days, Coffee day Enterprises share price has tumbled 28.6 per cent after the company informed the exchanges that the National Company Law Tribunal (NCLT), Bengaluru bench, has admitted the company for insolvency proceedings.

In an exchange filing, after market hours on Friday, the company said: "With regards to the application filed by IDBI Trusteeship Services Limited against the company with the National Company Law Tribunal (NCLT), Bengaluru, the plea has been admitted under Section 7 of Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process (CIRP) for Rs 2,28,45,74,180".

Coffee Day Enterprises Ltd (CDEL) is the parent company of Coffee Day Group, which operates Cafe Coffee Day chain of coffee houses.

CDEL owns and operates a resort, renders consultancy services and is engaged in the sale and purchase of coffee beans. According to a PTI report, it had defaulted in the payment of coupon payments of redeemable non-convertible debentures (NCDs).

IDBI Bank had subscribed 1,000 NCDs through private placement and paid Rs 100 crore towards the subscription in March 2019. For that Coffee Day Enterprises had executed and entered into an agreement with IDBITSL agreeing to appoint as the debenture trustee for the debenture holders.

However, Coffee Day Enterprises defaulted in paying the accrued aggregate coupon payments due on various dates between September 2019 and June 2020. Consequently, the debenture trustee, on behalf of all the debenture holders, issued a notice of default on July 28, 2020 to CDEL and approached NCLT.

Coffee Day Enterprises has been under the line of fire of lenders since the death of founder Chairman V G Siddhartha in July 2019. It is paring its debts through asset resolutions and has significantly scaled down from the time the trouble started.

In the April-June quarter of FY25 (Q1FY25) Coffee Day Enterprises Ltd had a total reported default of Rs 433.91 crore on payments of interest and repayment of principal amount on loans from banks, financial institutions, and unlisted debt securities as NCDs and NCRPS.

"Due to default in repayment of interest and principal to the lenders, the lenders have sent 'loan recall' notices to the company as well as initiated legal disputes. In view of the loan recall notices, legal disputes and pending one-time settlement with the lenders, the company has not recognised interest from April 2021," the company had said in a filing.

Meanwhile, the Board of Directors of Coffee day Enterprises is scheduled to meet on August 14, 2024, to consider and approve the unaudited financial results of the company for the quarter ended June 30, 2024.