In the red, VG Siddhartha was struggling to refinance debt
Café Coffee Day founder V.G. Siddhartha, whose body was found on Wednesday along the banks of Netravathi river in Mangaluru, was in discussion to refinance a substantial portion of his outstanding personal debt, said two people aware of his discussions with lenders.
The debt amounted to around Rs 2,000 crore and is over and above the consolidated borrowings of Café Coffee Day (CCD) group, which stood at Rs 6,547.38 crore as of March, according to the people cited above, who spoke on condition of anonymity, reports Livemint.
“The business was not generating enough cash to service the outstanding debt, which had ballooned because of accruing interest, forcing him to borrow again and again, often at a higher cost to pay existing creditor,” said one of the two people cited earlier, reports Livemint.
Watch: When CCD Founder V.G. Siddhartha described his ambitions
A letter purportedly written by him to the board and employees of CCD says growing pressure from creditors as one of the probable reasons for his disappearance. “I am sorry to let down all the people that put their trust in me. I fought for a long time but today I gave up as I could not take any more pressure from one of the private equity partners forcing me to buy back shares, a transaction I had partially completed six months ago by borrowing a large sum of money from a friend. Tremendous pressure from other lenders lead to me succumbing to the situation,” reads the letter.
Besides pressure from creditors and PE investors, the letter blames tax authorities for harassment over attaching his shares on two separate occasions to block a stake sale in software services firm Mindtree to Larsen and Toubro (L&T), which he maintains was unfair and led to a serious liquidity crunch.
Siddhartha left Bengaluru on Monday afternoon to Sakleshpur near Hassan, where he has a house and one of his coffee estates. He told Patil to drive towards Mangaluru after a short break at Sakleshpur to freshen-up.
Siddhartha is the elder son-in-law of senior BJP leader, SM Krishna, who was the external affairs minister in the UPA-2 government (2009-12) and state chief minister (1999-2004) when in the Congress.