Sunday, February 17, 2013

Diageo, United Spirits officials to meet this week



PTI : New Delhi, Sun Feb 17 2013, 12:12 hrs


Top officials of Diageo and United Spirits, including its chairman Vijay Mallya, are likely to meet this week to discuss regulatory and other issues related to their proposed USD 2 billion deal.
The transaction -- that would see global liquor major Diageo acquiring majority stake in United Spirits Ltd (USL) – is yet to receive green signal from fair trade regulator CCI, which is believed to have concerns about possible impact of competition in the market once the deal goes through.
Sources said that top officials of Diageo and USL are likely to meet this week in Goa to discuss various issues related to the proposed deal. UB Group Chairman Vijay Mallya is also expected to be present at the meeting.
Officials are expected to deliberate on issues related to regulatory compliance, including additional costs, among others, they added.
Depending on the outcome, there could be more meetings in the future, sources said. One of the world's largest spirit companies, USL is part of Mallya-led UB Group, whose aviation venture Kingfisher Airlines is going through turbulent times.
When asked about status of various regulatory approvals and whether the company has asked USL to take care of expenses related to regulations, Diageo said, "We have received Sebi's comments and we are considering them".
The company did not provide further details while similar queries sent to USL did not elicit any response.
On January 31, capital market regulator Sebi had cleared an open offer by Diageo for purchase of 26 per cent stake in USL, which is part of the USD 2 billion deal.
Sources said Competition Commission would take some more time before deciding on the Diageo-USL transaction and it has also sought more information from Diageo. A final decision by the Commission is likely in March, they added.
"Regarding the deal, the Commission is basically looking at Section 20 (4) of the Competition Act which relates to the impact of a combination to the competition in that relevant market," sources said.
Besides, there are also concerns that the deal could lead to consolidation in the Indian liquor industry in the long term, they said. Section 20 relates to various aspects of a combination in a relevant market, including actual and potential level of competition through imports, extent of barriers to entry and degree of countervailing power.
As part of the deal, Diageo would acquire 27.4 per cent stake for Rs 5,725.4 crore through a combination of share purchase from existing promoters and preferential allotment of shares. In addition, it had offered to acquire an additional26 per cent stake for Rs 5,441.07 crore through an open offer for public shareholders.

'KFA lenders to recover Rs 1,000 cr by March'




 B S :Abhijeet Madhav Lele  |  Mummbai  February 15, 2013 Last Updated at 00:47 IST


Lenders to Kingfisher Airlines Ltd, who have a collective exposure of Rs 7,000 crore to the grounded carrier, expect to recover up to Rs 1,000 crore by March end by selling part of the pledged shares and assets.

The plan is to sell the securities given as collaterals, Shyamal Acharya, deputy managing director (mid-corporates accounts) of State Bank of India, told reporters on Thursday. Lenders are working out legal issues for commencing recovery of dues from the Vijay Mallya-led airline.

A consortium of 17 banks, led by SBI, has an exposure of over Rs 7,000 crore to the carrier. The consortium has shares of listed group firms such as United Spirits as collaterals, which should realise Rs 500 crore. Additionally, the consortium has a residual right over the securities held by Srei Infrastructure Finance, which come to Rs 500 crore. Srei bought this from ICICI Bank in April last year.

“These are low-hanging fruits, which should give us Rs 1,000 crore. Balance are corporate guarantees, personal guarantees and properties,” Acharya said, adding the total collaterals held by the banks come at Rs 6,500 crore.

The group companies, where they have Mallya as promoter director, may find it difficult to raise funds since Kingfisher has defaulted on payments, bankers said.

SBI has the maximum exposure, over Rs 1,600 crore, in the Mallya-led airline, followed by Punjab national Bank with Rs 800 crore and IDBI at Rs 800 crore. Bank of India’s dues are Rs 650 crore and Bank of Baroda’s Rs 550 crore.