TPG for Vishal to be Shell company

Vishal Retail may become a Shell company if Texas Pacific has its way. The foreign private

equity firm, by agreeing to infuse Rs 500 crores, has put in a condition that Vishal Retail will transfer all its fixed assets to a special purpose vehicle that will be predominantly owned by Texas Pacific. Once the assets are parked in the SPV, Texas Pacific will run the business under a wholesale cash-and-carry entity, holding 82 per cent stake, while the balance equity will be held by lenders such as State Bank of India, HDFC, Bank of India and HSBC. TPG has also proposed that the wholesale company will come out with an IPO by 2015 and the CCD holders will have to convert their bonds in equity anytime before the IPO. The bonds will be converted at Rs 108 a share.

Vishal Retail is expected to realize Rs 75 crores by selling Vishal Water Park, a group company, and properties located in Dehradun, Hubli, Kolkata and Jabalpur. The money will be used to repay secured lenders. Vishal Retail, which faced financial problems over the past one-and-a-half year, approached lenders to restructure loans of Rs 740 crores. Under the agreement, TPG will bring in Rs 200 crores upfront and another Rs 300 crores to revive operations by 2014. The MoU Vishal has signed with TPG is non-exclusive and non-binding in nature. Vishal operates a total of seven stores and apparently has more than 1,000,00 sq. ft. of retail under its operations.