Mumbai: India’s United Spirits Ltd is set to sell new shares worth about $300-350 million (Rs1,398-1,631 crore) to institutions to help cut its debt, after efforts to sell a stake to private equity (PE) firms and Diageo Plc failed.
The world’s third largest spirits maker by volume is set to place the shares with institutions as early as this week, three people with direct knowledge of the deal said.
“The market is good enough for a share sale. Why opt for a PE firm that buys at the same price and adds little value otherwise?” one of the three people said. The people declined to be named as they are not authorized to speak with the media.
UB group chief financial officer Ravi Nedungadi and United Spirits president Vijay Rekhi did not respond to emails sent to them for comments.
Citigroup Inc. and UBS AG are among arrangers for the deal, which follows several months of talks with private equity firms Blackstone Group Lp and Kohlberg Kravis Roberts and Co. as well as investment firm Capital International.
United Spirits has debt of Rs6,500 crore, which it took partly to fund the acquisition of scotch whisky maker Whyte and Mackay, and has said it aims to cut this to Rs4,000 crore by the end of March 2010.
UB group chairman Vijay Mallya said in early September he planned to cut the firm’s debt by end-October.
In June, United Spirits sold treasury stock, carried on its books from past mergers and acquisitions, at an average Rs900 a share to raise about $186 million, which it used to repay some of its loans.
It still has at least eight million shares of treasury stock which it can sell or issue fresh ones. The people said United Spirits would opt for the latter. It got shareholders approval last month to raise up to $350 million.