The Hindu Business Line : Whyte & Mackay buy: UB to repay debt by March

Snapshot
The group will look at acquisition “opportunities” during 2008-09.
Awaiting Accenture report on Deccan-Kingfisher route rationalisation.
Combination of organic as well as inorganic route to growth to continue.

Our Bureau

Bangalore, Nov. 28 The UB Group plans to repay debt it raised to acquire Whyte & Mackay before March 2009 and may unlock the value of its properties by relocating some of its plants in Mumbai and other cities to other sites. The group will also look at acquisition “opportunities” as well during 2008-09.

To acquire Whyte & Mackay, ICICI Bank as well as Citibank provided the funding. The debt of £325 million was extended by ICICI to the intermediary holding company, while £310 million was extended by Citibank to USL. The group also raised a debt of around Rs 800 crore to fund the acquisition of nearly 46 per cent stake in Deccan Aviation which runs Air Deccan.

The group also plans to go for a rights’ issue through UB Holdings to raise Rs 425 crore and raise Rs 600 crore through qualified institutional placement and another Rs 720 crore through issue of warrants.

“We want to raise capital, we want to retire all the debt by 2009,” UB Group Chairman, Mr Vijay Mallya, told newspersons on the sidelines of annual general meeting of some of his group companies including United Spirits.

Accenture report

He said the group will wait for the consulting firm Accenture’s report on route rationalisation between Deccan Aviation and Kingfisher Airlines before taking a decision on the merger between the two airlines. Accenture is expected to submit its report next month.

“It is an intensive study. It (report) will be submitted during the first week of December,” Mr Mallya said. He, however, said there are no immediate plans for a reverse merger of Deccan Aviation with Kingfisher Airlines.

He said Accenture will submit a report on route rationalisation as well as on other operational synergies between the two airlines. He said the report will give a blueprint on how to bring down costs of Deccan Aviation as well as Kingfisher Airlines.

Mr Mallya said next year will see consolidation and strengthening of his group companies. He said the group has grown through a combination of organic as well as inorganic route.

“We will continue this philosophy,” he said. The group will try to unlock the value of its properties which are based on prime locations in cities like Mumbai and Hyderabad. There is a possibility of some of the properties being moved out of these cities to other locations.

There are also plans to launch Pinky Vodka in January. Pinky Vodka is a brand of Liquidity Inc, a California-based company, in which United Spirits acquired a 51 per cent stake.