The Hindu Business Line : United Spirits plans to raise $300 m to prune debt

United Spirits Ltd, a UB Group company, plans to complete the de-leveraging of its balance-sheet by the end of October to bring down its debt, the Chairman, Mr Vijay Mallya, said on Thursday.

United Spirits plans to raise up to $300 million to pay back debt.

The company had in July raised $185 million by selling the stock the company had on its balance-sheet and used the proceeds to repay debt.

“I have many options. I have treasury stocks, I have QIP and I have the private equity option,” Mr Mallya told reporters on the sidelines of the tenth annual general meeting of United Breweries, adding that the fund-raising would involve a combination of these options.

The company expects to complete the fund-raising exercise by end of October, he said.

12% volume growth

Earlier, addressing shareholders, Mr Mallya said UB registered a volume growth of 12 per cent against a market growth of 6 per cent, which resulted in expansion of market share by 200 basis points to 51 per cent.

UB and its associates sold 82.4 million cases of beer in fiscal 2009, up from 75.3 million cases in the previous year. The combined market share of all beer brands of the breweries managed by UB stood at 48 per cent.

“We are currently in the open window of a demographic dividend, and over a relatively short period of five years that began recently it is expected that nearly 10 crore youngsters will reach legal drinking age.

“This obviously provides a major expansion of our addressable market share,” Mr Mallya said.

Heineken talks

The UB promoters are in negotiation with Heineken N.V. for a comprehensive business partnership agreement to formalise Heineken’s entry into UB Ltd.

“The talks are on and the terms and conditions of a formal agreement are yet to be finalised,” he said.

Consequent to the takeover of Scottish & Newcastle Plc (S&N) by the Heineken Group, a 37.5 per cent equity stake in S&N is now effectively owned by Heineken.

Funds for Kingfisher Air

Mr A. K. Ravi Nedungadi, CFO, UB Group, said the company was planning to raise funds for Kingfisher Airlines through a rights issue and by issuing global depository receipts before the end of current fiscal.

He did not disclose the size and the timing of the issue, but said the proceeds would be used to retire debt and fund working capital requirements.

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