INDIA: United Spirits refinances debt
United Spirits secures seven-year loan
The Vijay Mallya-controlled Indian spirits group said yesterday (25 July) that its new seven-year loan is set to work out 0.45 percentage points cheaper than its existing loan facility.
The deal offers United Spirits some breathing space as it seeks to expand. The new loan includes a three-year moratorium "and a ballooning repayment over the subsequent four years", said the firm, which, as of this year, claims to be the world's largest spirits group by volume.
According to United Spirits, the loan deal will also help Whyte & Mackay in its efforts to refocus on branded Scotch whisky, rather than bulk supply. "This arrangement gives Whyte & Mackay, which United Spirits acquired in 2007, the flexibility of focusing on its brand building plans, which are receiving a very favourable response," said the group.
Debt levels at United Spirits have been a significant concern, threatening to overshadow consistent rises in sales and profits over the past two years. In 2007, the firm took out a US$625m loan to finance the acquisition of Whyte & Mackay for US$1.18bn. According to reports, United Spirits has debt of around INR60bn (US$1.35bn).
In late 2009, the group sought to raise funds to pay off debt via a share sale. It also entered talks on a potential tie-up with Diageo, although these negotiations came to nothing. In early 2010, sources close to the company said that it was considering a stock listing for Whyte & Mackay, although this, too, has so far failed to materialise.
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