United Spirits, the flagship spirts firm of the UB Group owned by billionaire Vijay Mallya, has raised close to Rs 950 crore through a open market sale.
The company has sold 10.2 million shares held under treasury stock at just under Rs 900 a share to a clutch of investors on Tuesday. The entire proceeds from this will be used to settle a part of its debt pile which is at Rs 7,500 crore, a leverage of nearly 3 times.
USL has a total of 17.5 million shares under treasury and remaining will be used at a later stage to further pay back debt.
A K Ravi Nedungadi, president & CFO, UB Group said that they had raised $625 million debt to acquire Scotland based scotch-firm Whyte & Mackay for around $1.2 billion during 2007 and during the 2009, USL had to repay $115 million.
"During May we made a payment of $45 million and on top of that we are making an additional $70 million payment during July which is actually due during November. In addition to $115 million which is actually due during 2009, we are paying back an additional $200 million within a month from this sale. As against a repayment obligation of $115 million, we would have paid back $315 million during 2009," he said.
This is part of a deleveraging plan by United Spirits and going forward the company may look at other instruments including QIP, GDR, private equity to further pare the debt. USL is looking to raise around $250-$300 million through the second round of fund raising which is "expected in a few months time."
With these initiatives, USL would have paid back a total of Rs 2,200 crore of the Rs 7,500 crore debt giving itself a much need relief.
These moves targetted to deleverage the company comes even as its attempt to forge a strategic relationship with global spirits firm Diageo is not getting finalised. Various anti-monopoly and valuations issues are being discussed. "We need a strategic partner at a global level and it may be with Diageo or with someone else," noted a company official.
