The new management of Coffee Day Enterprises (CDE), Cafe Coffee Day, has promised to offer additional shares as collateral to bond investors after it’s stock price fell as much as 60per cent in the past four trading sessions. The representatives of bond investors met the new management, with some debt investors sending formal notices to CDE authorities on additional collateral, said two people with the direct knowledge of the matter.  Select mutual funds and two nonbanking finance companies, including the one owned by a former senior banker, bet on bonds sold by the CDE group companies.
Collateral against such bonds was in the range of 1.25x and 2.75x. However, with the fall in share price by 60 per cent over the past few days, in some cases the cover has slipped below the investment value, worrying these bond owners.  DSP Mutual Fund marked down its investments in its scheme DSP Credit Risk Fund, which held these bonds by 50 per cent.
A query post on the CDE website remained unanswered until the publication of this report. Brickwork Ratings, a domestic company that assesses borrowers’ creditworthiness, used to rate these bonds, some of which were secured through the personal guarantee of the deceased CDEL promoter VG Siddhartha.
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