United Spirits' net worth will take a hit of 3.69T Indian rupees as money from selling its Whyte and Mackay whisky business insufficient to repay a loan that company had taken to buy it

Nevin Barich

BANGALORE, India , June 3, 2014 (Mint (New Delhi)) – The net worth of United Spirits Ltd, controlled by Diageo Plc, will take a hit of Rs.3,690.3 crore as the money from selling its Whyte and Mackay whisky business is insufficient to repay a loan it had taken to buy it.United Spirits wants to now write-off this amount, it said in a filing to BSE on Monday.

The proposed write-off, which needs to be approved by the Reserve Bank of India (RBI), is another blow to Diageo, which bought a 25.02% stake last July in United Spirits, which has been losing market share since then.

United Spirits bought Whyte and Mackay in 2007 for £575 million by borrowing $618.9 million from Citibank and £325 million from ICICI Bank Ltd. The company owes £370 million of the ICICI Bank loan despite refinancing it twice, first in August 2011 and then in March.

United Spirits has prepaid the Citibank loan.

The firm was forced to put Whyte and Mackay on the block after the UK antitrust regulator raised concerns in November about the impact of Diageo's acquisition of United Spirits on whisky prices in the UK. The competition watchdog felt the merger may lead to higher whisky prices in the UK because Diageo, the world's biggest distiller, and Whyte and Mackay controlled a significant part of the market.

On 9 May, United Spirits said it was selling Whyte and Mackay to Philippines-based Emperador Inc. for £430 million in a deal that will help India's largest distiller reduce its debt of nearly Rs.8,000 crore by about £370 million.

United Spirits said on 27 May that it would take more time to report its fiscal fourth-quarter and full-year financial results, partly because of the accounting related to the sale of its Whyte and Mackay whisky business.

India's largest liquor company was expected to report results on 16 May but said on 15 May it was delaying its results due to unavoidable circumstances.

Diageo's whisky brands Bell's, Johnnie Walker and others compete with Whyte and Mackay's namesake label and other brands.

Diageo said in April that it would offer to buy another 26% in United Spirits from public shareholders at Rs.3,030 per share. If the open offer is successful, Diageo will end up owning nearly 55% of United Spirits. Published by HT Syndication with permission from MINT. For any query with respect to this article or any other content requirement, please contact Editor at htsyndication@hindustantimes.com

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