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Café Coffee Day operator appoints Ernst & Young for due diligence of coffee business

Café Coffee Day

MILAN – Coffee Day Global, which manages the coffee business of Coffee Day Enterprises Ltd (CDEL), has appointed Ernst & Young to perform preliminary due diligence of the parties interested to buy the chain.

The board of CDEL has appointed the global professional services firm to provide interim business support and to evaluate proposals of the potential investors, as per a stock market disclosure.

CDEL has been in talks with private equity firms like KKR, TPG Capital and Bain since last year to sell stake in its coffee retail business, which operates more than 1,400 cafés and almost 60,000 vending machines.

The company has been looking at various ways to pare its enormous debt, since founder VG Siddharta committed suicide last year.

A letter, purportedly written by Siddhartha, had mentioned an unnamed PE partner as pressuring him into a share buyback, and “harassment” from tax authorities, among other reasons for the suicide.

Separately, Coffee Day Enterprises had appointed IDFC Securities Ltd to explore divestment opportunities for the group and to refinance its existing debt.

According to media, Siddharta’s family has put most of its personal assets for sale to repay lenders and address the fallout of the investigation into his suicide.

The group has been in talks to liquidate some of its assets. In August, PE giant Blackstone acquired its Bengaluru tech park for close to Rs 3,000 crore (US$402 million).