K. Giriprakash

Bangalore, Nov. 15

TO get a better valuation, McDowell has decided to wait till the merger of spirits' companies is completed before raising funds to clear its $250-million debt to ICICI Bank.

Such funds will be raised in tranches rather than in one go, a top UB official told Business Line. "We will raise capital at different levels of valuation," the official said. He said that ICICI's loan needs to be paid back in two years and the company has a window of over 18 months to clear it. Hence, it will wait till the merger of all spirits companies into McDowell is carried out and consolidated results are brought out. The merger is expected to happen by January or February next year. UB has already filed an application for the merger of spirits companies with SEBI. The merged entity will be rechristened UB Spirits.

The official said McDowell would, in fact, start its fundraising activity towards the end of the loan repayment period. The official said there is a possibility of UB Holdings' stake in McDowell coming down from the current level of 42 per cent. He said McDowell has reported good results during the last two quarters and this should also reflect in good valuation for the company. McDowell had raised around $300 million from ICICI to part finance its acquisition of Shaw Wallace liquor business. It has also received board approval to raise up to $250 million for repaying the debt.

The merged entity will make it the world's second largest liquor company with a total capacity of 60 million cases with a share of around 60 per cent in the domestic market. The UK-based Diageo is the largest in the world with a capacity of 91 million cases. United Spirits will consist of McDowell & Company, Herbertsons, Triumph Distilleries & Vintners and Shaw Wallace & Company. It will have combined sales of around Rs 3,000 crore and a portfolio of about 130 brands, including McDowell No 1 whisky, Herbertsons' Bagpiper Whisky, Shaw Wallace' Royal Challenge and Triumph's Gilbey's Green Label.

(This article was published in the Business Line print edition dated November 16, 2005)
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