McDowell raises $230 million from GDS/FCCB issues

Liquor major McDowell & Company Limited has raised a total of $230 million from overseas issues of depository shares and convertible bonds. The company would use the funds to retire high cost debt.

McDowell issued more than 1.75 crore global depository shares (GDS) at a price of $7.43 per GDS, every 2 GDS representing 1 equity share. The GDS issue which raised $130 million was oversubscribed by twice the amount. The pricing works out to Rs660 per equity share, a marginal premium to the average domestic prices of the equity shares for the last week.

The GDS would be listed on the Luxembourg Stock Exchange

The company also raised $100 million by issuing FCCB''s with a maturity of five years. The bonds carry an interest rate of 2 per cent per annum and are convertible into equity shares at a premium of 30 per cent to the GDS reference rate. The bonds can also be converted, at the option of the company, into equity shares after a period of 18 months.

The bonds would be listed on the Singapore Stock Exchange.

McDowell had raised a considerable amount of debt to finance the acquisition of Shaw Wallace & Company from the Chabrias. The company would retire part of the debt from the issue proceeds and the balance would be used for other purposes including possible acquisitions.

McDowell, part of the UB group, is the dominant player in the alcoholic spirits segment, excluding beer. The company acquired the second largest player Shaw Wallace last year and currently has a market share of around 60 per cent.

The spirits business of UB group is currently dispersed among various companies like McDowell, Shaw Wallace, Herbertsons and IDV. The group is in the process of consolidating its spirits businesses under McDowell, which would be renamed as United Spirits Limited after the exercise.

After consolidation, United Spirits would be the third largest liquor company in the world in volume terms behind Diageo and Pernod Ricard.