UB Group shares tumble as chief unsure of Diageo deal

Written By Unknown on Senin, 29 Oktober 2012 | 15.45

Moneycontrol Bureau

Shares of liquor firm United Spirits and other UB Group firms -- United Breweries and United Breweries Holdings -- tumbled 1% to as much as 17% on Monday after chief Vijay Mallya said he was not sure if a deal with Diageo will be struck.

"Whenever we need to say something we will, we keep discussing but we don't know whether a deal will happen or not," Mallya told Reuters news agency on the sidelines of the Indian Grand Prix on Sunday.

UB Holdings has 18% stake in United Spirits and 24.5% in Kingfisher Airlines. UB Group has huge debt across group companies, including United Spirits, which has over Rs 8,000 crore debt, and so a deal with Diageo, which is in talks to pick a stake in United Spirits, is essnetial.

Last week Kingfisher's management negotiated a settlement with its employees, agreeing to pay 3-months salary by Diwali. According to CNBC-TV18 sources, the airline told the DGCA (Director General of Civil Aviation) that UB Group will fund the airline out of its current mess.

The government has opened the doors for foreign airlines to invest in Indian carriers. However, with no investor in sight to bale out Kingfisher, and the DGCA unwilling to let Kingfisher fly unless there is a proper turnaround plan, the Diageo deal is the only helping hand around the corner for Mallya, who has said he will not sell family silver to fund the airline.

At 13:40 hrs, UB Holdings was down 10% at Rs 118.40, United Spirits plunged 17.3% at Rs 995 and United Breweries declined 1.3% at Rs 725 on NSE. Kingfisher Airlines extended Friday's gains and was up 0.9% at Rs 11.45.



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