Vishal Retail has completed the sale of its wholesale and retail businesses to private equity firm TPG Capital and Shriram Group respectively, Reuters reported. The company, which struggled during the economic downturn, will use the proceeds of the sales to pay down debt, Reuters reported.
(Reuters) – Vishal Retail on Monday said it has completed the slump sale of its wholesale and retail businesses to private equity firm TPG and Shriram Group respectively, sending its shares up by 20 percent.
The company on Monday said it completed the sale after obtaining approval from the Delhi High Court. The court had last year stayed the asset sale by Vishal following petitions by a few lenders who were not part of the retailer’s debt recast.
Vishal Retail, which ran into difficulties in late 2008 after failing to raise equity amid the economic downturn, received board approval in September to sell assets to TPG and Shriram Group to repay debt, which was as high as 7.35 billion rupees as at end-June 2010.
Vishal Retail, valued at about $15 million, lost about 40 percent of its market capitalisation in the last six months following uncertainty over its future due to high debt and a court order restraining the sale of its assets.
Vishal Retail on Monday said it will receive a total of 700 million rupees as cash consideration for the sale, which is lower than the 1 billion rupees the company had announced in September. Vishal didn’t give a reason for the reduction.
Vishal Retail has ceased operating its stores, and “most employees” of the retailer will retain their jobs with the new owners, the company said.
Vishal Retail had “ambitious plans” for its next venture and was working out details, founder and Managing Director R C Agarwal said in a statement.
(Reporting by Sanjeev Choudhary; editing by Sunil Nair)