UB Group company Shaw Wallace has sold out its entire 10.2% stake in publicly listed United Spirits in an open market transaction. At the current market price this stake is valued at Rs 900 crore or about $180 million. The buyers remain unidentified.
The money from the stake sale will be used to repay debt taken by United Spirits for the White & Mackay acquisition.
Although Shaw Wallace is a UB Group company, it is not listed as a part of the promoter group holdings. As a result the promoter holdings in United Spirits remains unchanged at 36.57%. Shaw Wallace, formerly owned by Manu Chhabria, was acquired by Vijay Mallya in early 2005, bringing to an end two decade old corporate battle for its control.
Shaw Wallace in which United Sprits holds around 31% stake is in the process of being merged with United Spirits. After merger, United Spirits could have had to sell treasury shares of its own holding in the company. The latest transaction where Shaw Wallace has sold its stake in United Spirits could also have been to pre-empt such a scenario. Recently, Jaiprakash Associates had sold a part of the treasury stock created through a similar group merger exercise.
Meanwhile in an interview with CNBC, UB Group CFO Ravi Nedungadi said that United Spirits has a total of 17% treasury stock of which 10% has been sold through the transaction.
He said that the group is also looking at a possible qualified institutional placement (QIP) to reduce debt on its books. The company is looking at both the options of selling a stake to private equity investor or going through a QIP for raising funds.
United Spirits had borrowed $600 million for the Whyte & Mackay acquisition, of which $110 million has been paid back. With the latest transaction it would be able to payback another $180 million, cutting the total loan for the deal by half to around $300 million.