Promoters pledge majority holding in United Spirits

Promoters of Mallyas flagship company,have pledged the majority of their shares with various banks and FIs to raise resources.

Promoters of United Spirits (USL),billionaire Vijay Mallyas flagship company,have pledged the majority of their shares with various banks and financial institutions to raise resources. The development comes close on the heels of the group calling off talks with spirits giant Diageo and several private equity (PE) majors including Blackstone and Capital International following differences over valuation.

The company had planned to raise $300 million through stake sales to reduce its debt worth Rs 6,500 crore.

United Spirits is Indias largest spirits company and figures among the top three spirits makers in the world. Its leading brands are exported to several countries and command close to 60 per cent market share within the country.

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In its latest regulatory filing,United Spirits said the promoters had pledged 86.55 per cent of their holdings in the company with various banks and financial institutions. The promoters were holding 3.66 crore shares of Rs 10 face value each aggregating to 29.16 per cent stake of the total paid-up capital of the company. Of this,Mallya group entities mainly Kingfisher Finvest India which holds 9.56 per cent stake and United Breweries Holdings which holds 19.02 per cent had together pledged 3.17 crore shares aggregating to 86.55 per cent of their total holding or 25.24 per cent of the total outstanding shares of the company. USL has a total paid-up equity of over 12.59 crore shares of a face value of Rs 10 each at the end of June quarter.

Analysts said the promoters seem to have reshuffled their share pledges between end-June and July this year. As of June 30,2010,promoters had pledged almost the entire stake in the company with banks and financial institutions.

According to them,as of end-June,Kingfisher Finvest had pledged close to 95% of its stake and UB Holdings had pledged its entire stake. They might have rejigged the pledge taking advantage of the market conditions, said an analyst with a local broking house who did not want to be named,adding there seems to be no incremental pledge as well.

The actual quantum of shares pledged by the promoters of United Spirits stands at 86.55 per cent today.