Liquor maker United Spirits Ltd (USL) has lined up a number of measures, including selling treasury shares and surplus land and properties, to pare its huge debt of ₹7,600 crore.
The board has approved the plan to monetise surplus assets, say sources. The company plans to offload a substantial number of treasury shares of both itself and those of United Breweries held by USL.
However, the treasury shares of USL are stuck in a litigation with a bank and it is expected to take a few more months before the issue is settled.
Sources said the treasury shares under litigation number about 3.5 million and are valued at ₹900 crore. The other shares are of United Breweries—about 8.5 million and held by USL. .
A USL spokesperson did not respond to queries regarding details on reduction of debt by the company.
The liquor giant, which was acquired by UK-based Diageo Plc in 2012, is in the process of reducing its debt over a period of time.
Whyte & Mackay dealIn May this year, it entered into an agreement to sell Whyte & Mackay to Philippines-based brandy maker Emperador Inc for £430 million (₹4,345 crore).
Emperador UK is a subsidiary of Emperador, which is part of Alliance Global, one of the world’s largest manufacturers of brandy.
USL bought Whyte & Mackay in 2007 for about £600 million. Part of the proceeds from the sale will be used to repay the Whyte & Mackay acquisition debt of £370 million. Diageo has paid about $3 billion to acquire a total stake of 54.78 per cent in USL through a mix of preferential allotment, purchase of shares from the UB Group and an open offer.
USL, through the sale of treasury stocks, United Breweries shares and surplus land and properties, is expected to generate about ₹2,000 crore.
With the sale of Whyte & Mackay, the total amount of debt could be pruned further to ₹2,000 crore from about ₹7,600 crore now.
On Tuesday, the USL scrip gained 0.6 per cent to ₹2,637.70 on BSE, while the benchmark Sensex gained 0.13 per cent to 27,910.06 points.