Lenders to United Spirits, with which the company’s promoters have pledged almost their entire holding, may get the proceeds from sale of its shares to Diageo directly.
As per the detailed public statement of the open offer submitted by United Spirits to the exchanges on Tuesday, the acquirer, Relay BV, an indirectly wholly owned subsidiary of Diageo Plc, the sellers, including the promoters of United Spirits and certain lenders or security trustees of United Spirits, are likely to get into an escrow agreement that would facilitate payment to the lenders directly, subject to regulatory approval.
Currently, as much as 97.95% of promoter shares are pledged with these lenders.
The move clears the hurdles to sale of shares by the company to Diageo Plc.
“Execution of escrow agreement(s) between the acquirer, the sellers, certain lenders/security trustees and other interested parties and an identified escrow agent and, if applicable, the receipt of the approval from the RBI, would enable the payment of the sale consideration by the acquirer directly to such lenders/security trustees and other interested parties instead of the sellers for the relevant sale shares,” said the public statement issued by JM Financial Institutional Securities, manager to the offer for and on behalf of the acquirer and persons acting in concert.
The acquirer is likely to enter into "security release agreements” and “security release confirmations” with United Spirits’ lenders or security trustees before entering into escrow agreement with them, so that the acquirer is able to get delivery of shares free from encumbrances and other liabilities.
The company is likely to file a draft letter of offer with the Securities and Exchange Board of India (Sebi) on November 27 and the last date for revising the open offer price or size would be January 1.
The tendering process, or the open offer, is likely to remain open between January 7 and January 18. The open offer price currently set by Diageo stands at Rs1,440 per share, while the current market price is Rs1,762.20.
As per the detailed statement, United Breweries (Holdings) Ltd intends to sell 9.07 million equity shares representing 6.24% of the emerging voting capital of United Spirits to Diageo group as per the share purchase agreement, while the other sellers would include Kingfisher Finvest (selling 5.26% of emerging voting capital), SWEW Benefit Company
(0.09%), USL Benefit Trust (2.38%), Palmer Investment Group Limited (3.01%) and UB Sports Management Overseas (0.38%).
Emerging voting capital has been computed after considering the proposed open offer issue (representing 26% of emerging voting capital) and allotment of the preferential shares that would represent 10% of emerging voting capital.