United Spirits Ltd, a part of Vijay Mallya-led UB Group, is looking to raise $175 million (Rs 945 crore) through issue of foreign currency convertible bonds (FCCB), with a green shoe option of an additional $50 million (Rs 270 crore), the company has said.
Bulk of the money is expected to be used to retire foreign currency debt.
“With a view to bring down the high cost debt and consequently improving both profits and EPS, the company seeks to raise funds through FCCBs,” the company stated.
At 11:45 am, shares of United Spirits were trading at Rs 549.80 a piece on the BSE, down 4.36 per cent from the previous close.
Standard Chartered Bank, Rabo Bank and DBS Bank have been appointed as advisors for the issue of FCCB and the company is holding an EGM in January to get shareholders’ approval before proceeding with the issue.
Bangalore-based United Spirits manufactures and sells alcoholic beverages in India and abroad. In 2007, the company’s debt increased when it acquired Scottish whisky distiller Whyte & Mackay for Rs 4,800 crore. Its spirits arm reportedly had debt of around Rs 7,750 crore as of September 30, 2011, and the firm is paying a large sum as interest each quarter that is eating into its earnings.
