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Sical in talks with DP World, others to sell its port assets

The Coffee Day Group company’s iron ore container terminal in Ennore is valued at Rs 800 crore and Sical Logistics is looking to halve its debt with this deal

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Sical Logistics, Multimodal logistics services firm, Coffee Day Group, Dubai Port World, DP World, Sical Iron Ore Terminals, VG Siddhartha, Ennore, Kamarajar Port, Iron ore and coal terminals, ICICI Securities, Mining, Port logistics, Road and rail transport, Container freight station, Warehousing, Shipping, Nhava Sheva International Container Terminal, ICRA

Sical Logistics, a leading offshore and multimodal logistics services firm owned by the Coffee Day Group, is in exploratory talks with Dubai Port World (DP World) and some other strategic investors for the sale of assets including Sical Iron Ore Terminals. This is part of moves to slash the group's debt after chairman VG Siddhartha’s death in July.

The talks are for Sical’s assets in Ennore’s Kamarajar Port, including dedicated iron ore and coal terminals at the facility, valued at about Rs700-800 crore. Sical, which has net debt of close to Rs 1,500 crore, aims to reduce this by half through the transaction.

ICICI Securities is advising Sical, sources said.

In an earlier regulatory filing, Sical had said it was looking to divest all strategic assets.

“In wake of the sad demise of our promoter and further to the observations made by the ultimate holding company, that is, Coffee Day Enterprises to deleverage the Coffee Day Group, the board considers it appropriate to come up with a roadmap to deleverage Sical and its subsidiaries,” it said in an exchange notification. “Accordingly, the board has asked Sical management to explore all the strategic alternatives to possibly deleverage Sical and its subsidiaries.”

The terminal was originally meant for iron ore exports but, following a Supreme Court ban, it had to be modified to handle other commodities such as coal. The group is believed to have invested a little over Rs 1,000 crore capital expenditure on the asset, said executives aware of the matter.

The company is an integrated logistics solutions provider for bulk and containerised cargo and has interests in mining, port logistics, road and rail transport, container freight station, warehousing and shipping among others.

DP World is a global port operator with a portfolio of 78 operating marine and inland terminals supported by over 50 related businesses in over 40 countries across six continents. The company is building an integrated logistics platform in India. Its Nhava Sheva International Container Terminal (NSICT) is part of India’s largest port, JNPT, which handles 40% of total maritime trade.

“Till FY2019, the promoters had infused Rs 281 crore of unsecured loans towards various debt repayments and capital expenditure requirements and additional support from the promoter group was expected to continue if the cash flows from Sical were inadequate to meet its debt servicing and capex requirements,” ratings agency ICRA said in a note earlier this month.

“However, the financial flexibility of the group has weakened significantly following the aforementioned development and subsequent steep decline in share prices of group listed entities, including Sical, since a large portion of group loans was backed by personal guarantee of promoter and pledge of listed and unlisted group entities,” it said.

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