New Delhi: Coca-Colas Indian arm has decided to divest 49-per cent equity in its downstream beverage company Hindustan Coca-Cola Beverages Pvt Ltd (HCCB). The divestment will be made on a private placement business with shares being offered to employee trusts, present and former Coca-Cola bottlers, suppliers, business associates and private investors.

With this decision, Coca-Cola has complied with the 17 August 2002 deadline fixed by the government to announce plans for diluting equity stakes in its bottling subsidiary.

Coca-Cola spokesman Joel Peres says the divestment condition had been laid down in the original approval given to the company in 1996. He clarifies that Coca-Cola had no intention of retaining 100-per cent stake in the bottling subsidiary. It was only a question of time before Coca-Cola divested its stake in the company. It is not the policy of Coca-Cola to retain a 100-per cent stake in its bottlers anywhere in the world.

Peres, however, insists that the company had been seeking a waiver only to divest at a more opportune time to enable the shareholders to get market competitive returns. Regarding the companys decision to opt for private placement, he says this was the advice given by the companys merchant bankers, ICICI Securities and ABN AMRO Corporate Finance.

Under the plan now finalised, the wholly-owned subsidiary of the US-based Coca-Cola Corporation, Hindustan Coca-Cola Holdings Pvt Ltd, will sell 39-per cent equity to private investors and business partners. These business partners will include licensed bottlers of the Coca-Cola company suppliers as well as former bottlers. The balance 10 per cent will be divested in favour of local resident Indian employees welfare and stock option trusts.

This will leave the parent company with a 51-per cent equity stake. The company expects to complete the divestment process as soon as possible, says Peres.