Last word

India’s United Spirits, the world’s third largest spirits maker, has received term sheets from private equity firms Blackstone, KKR and Capital International interested in buying a stake worth US$250m-300m in the company.

The company’s talks with financial investors were proceeding along with other plans to raise cash and pay down a part of its debt, the report said citing people familiar with developments.

The three private equity firms were doing a due diligence and a possible transaction with any of them would happen at a slight premium to the prevailing market price, some time soon, the paper said.

The deal could see 10% of the firm changing hands, it added. United Spirits has a current market capitalisation of around US$1.82bn.

The alcoholic drinks maker would probably be issuing fresh shares to the new investor along with the sale of the remaining treasury stock, the report said.

“We do not comment on market speculation,” a spokesman for the UB Group said.

On June 30. Shaw Wallace, which is a part of the United Breweries Group, sold 10.28 million shares of United Spirits, raising 9.05bn rupees (US$188m).

This would be used for early repayment of the loan taken to acquire Scottish spirits maker Whyte & Mackay in 2007.

The company said that with this and other payments made, it would have repaid about half of the original loan in the process, saving about 850 million rupees in interest costs.

UB Holdings’s chief financial officer Ravi Nedungadi also said that the company was looking to raise about US$250m through various means which could include sale of its remaining treasury stock of 8.35 million shares, a placement to institutions or with private equity funds.

* A potential restructuring of the debt supporting directories publisher Yell is once again in the spotlight following publication of the company’s annual report.

In the report chief financial officer, John Davies, said it was a priority to “assess the most appropriate steps towards refinancing the group”.

Yell has free cashflow of £395m to meet interest and debt obligations.

According to Paul Gooden, an analyst at ABN AMRO: “They are repaying the capital on the debt and the banks are happy with that but if they do hit covenants, it could force a debt for equity swap or an equity raising.”

There has been some precedent set for rights issues in the media sector, Nordic business directories company Eniro last week successfully wrapping up its US$325.3m issue.

“But Yell is in a slightly different place as it has quite a lot more debt,” said Gooden.

Yell has a market capitalisation of £214.15m against a debt pile of £4.3bn.

In the annual report the auditors PricewaterhouseCoopers said: “There is a risk the group may need to re-negotiate its financial covenants with its lenders.”

Last September Yell suspended dividend repayments and in October it renegotiated its debt agreements. That was followed by speculation in April that debt agreements would have to be reset again, which the company denied at the time.

Now, according to the auditors the fact that the syndicate of lenders could demand immediate repayment of debt if covenants are breached indicates: “the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern.”