The deal between United Breweries Group and Diageo Plc is gradually taking off. On Monday, the board of director of United Spirits Ltd. (USL) approved the issue and allotment of 14,532,775 USL equity shares to Diageo subsidiary Relay BV at a price of Rs. 1,440 per share on a preferential basis as per a previous agreement.

These shares amount to 10 per cent of the post-issue paid-up capital of USL. USL has also received Rs. 2,092 crore from Relay towards payment for the allotted shares, the company said in a filing to the stock exchanges. This money will go towards retiring a part of USL’s over Rs. 8,000-crore debt.

The preferential allotment of shares was approved by shareholders on December 14, 2012. Following this allotment, the paid-up share capital of the company has increased to Rs. 1,453,277,430 from existing paid up capital of Rs. 1,307,949,680.

Prior to this, Diageo had launched an open offer to acquire up to 26 per cent USL shares from the public shareholders but the open offer had received a very tepid response as the market price of USL shares was very high as compared to the offer price of Rs.1,440.

In all, Relay could get only 58,668 shares, constituting a 0.04 per cent stake in USL.

“As of May 27, 2013, these shares are in the process of being transferred ,” USL said.

The USL board also appointed Relay BV nominee Gilbert Ghostine as an additional director on USL board, effective immediately. Mr. Ghostine is president of Diageo Asia-Pacific, and is a member of the global executive committee of Diageo plc. More members will be inducted later, although Vijay Mallya will continue as chairman of the company.

As per the agreement, UB group companies and its promoters need to transfer 19.3 per cent stake of USL to Diageo to let Diageo acquire a 27.4 per cent stake in USL, including the preferential allotment of 10 per cent stake of the enhanced equity capital. The bulk of the UB group and promoters’ shares have been pledged with banks towards Kingfisher’s loans. A chunk of these have been sold by the banks to recover part of their money.

Meanwhile, UB group has moved the court to restrain banks from selling more USL shares so that it could honour the commitment made to Diageo. USL shares, on Monday, touched a new high of Rs. 2,605 before closing at a loss of 2.18 per cent at Rs. 2,513.55 on the BSE.

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