Leading travel operator Cox & Kings on Monday announced it has sold its subsidiary Holidaybreak's camping division to French travel company Homer Vacances for Rs 892 crore (89.2 million pounds) in an effort to reduce its debt. The company also wants to focus on two of its main businesses, leisure and education.
It currently has net debt of Rs 4,200 crore.
"The proceeds will be used to reduce portion of our debt burden," Anil Khandelwal, chief financial officer, Cox & Kings said in an analyst call.
The camping division provides outdoor family holidays at 170 third-party owned campsites across 12 European countries.
Out of Rs 892 crore, Rs 855 crore (85.5 million pound) is payable in cash on completion of the deal, which is likely to take 90-days time, to say, around August. Another Rs 37 crore (3.7 million pound) will be in the form of deferred payment relating to tax refund.
Khandelwal said, "Everything will get transferred to the buyer. So neither expenses nor revenue from the camping business will now come to us in the current financial year."
The completion of the transaction is, however, conditional to fulfillment of customary conditions including receipt of regulatory approvals.
Peter Kerkar, director, Cox & Kings, said, "The sale of camping business is consistent with our strategy of becoming a leisure and education travel group and allows us to focus on these businesses that have a global footprint and market leadership position." Cox & Kings acquired Holidaybreak in 2011 for about 312 million pounds in an all-cash transaction.
Kerkar said camping business requires huge capex and sucks free cash flows. Besides the business runs only for four-five months in a year, and has failed to see any major demand from India.