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Shares of Indian coffee chain tank 20% after founder goes missing

Published 07/30/2019, 05:05 AM
© Reuters. V.G. Siddhartha, chairman of Coffee Day Enterprises Ltd, speaks during a news conference in Mumbai
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By Sachin Ravikumar and Nivedita Bhattacharjee

BENGALURU (Reuters) - Shares in India's biggest coffee-chain owner Coffee Day Enterprises (NS:CODE) slumped 20% on Tuesday after its founder and largest shareholder was reported missing, with local media citing a letter allegedly written by him that shows he was under pressure from lenders.

V.G. Siddhartha, the founder of the Cafe Coffee Day (CCD) chain, was not reachable since late Monday, Coffee Day Enterprises said in a regulatory filing, adding it was seeking help of local authorities.

The entrepreneur may have taken his life as he faced pressure over outstanding debt and unpaid dues, domestic media reported, citing the letter that was purportedly written by Siddhartha and addressed to the board of the company on July 27.

"I would like to say I gave it my all. I am very sorry to let down all of the people that put their trust in me. I fought for a long time, but today I gave up," Siddhartha allegedly wrote in the letter, which was available on social media and published by media.

Reuters was unable to independently verify the authenticity of the letter and its contents. One board member that Reuters spoke with said they had not personally received the letter and could not comment on its authenticity.

Coffee Day declined to comment on the letter.

Siddhartha was on his way to Mangaluru, a port city about 350 km from India's tech hub of Bengaluru, local (Mangaluru) police said.

"Siddhartha went missing last night near the Nethravathi river. A missing person case has been registered and a search is underway," police officer Hanumantharaya told Reuters.

Local television channels showed rescue workers in rubber boats scouring the waters beneath a bridge where Siddhartha was reportedly last seen.

INVESTOR PANIC

The company's stock hit an all-time low on Tuesday. Shares were trading at 153.4 rupees, as of 0625 GMT, after hitting their lower circuit for the trading day.

Coffee Day sought to allay investor concerns, saying in its filing that the "company is professionally managed and led by competent leadership team, which will ensure continuity of business."

A source aware of the developments said the company's board had convened an emergency meeting at 0930 GMT (3 p.m. local time) to discuss further steps.

Siddhartha is a well-known Indian entrepreneur and started CCD over two decades ago. He owns a direct stake of 32.75% in the company, and together with his family controls 53.93% of the firm.

He was in talks with Coca-Cola Co (N:KO) to sell CCD for as much as $1.45 billion, The Economic Times reported last month. He recently sold about 20% of his stake in tech firm Mindtree (NS:MINT) to engineering and construction company Larsen & Toubro Ltd (NS:LART).

© Reuters. V.G. Siddhartha, chairman of Coffee Day Enterprises Ltd, speaks during a news conference in Mumbai

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