DECCAN AVIATION: To Sell 26% Stake to UB Group for INR5.5BB
Company Reporter, June 5, 2007
Deccan Aviation plans to sell 26% of
the company for around INR5.5 billion to United Breweries Group, various reports say.
Deccan Aviation's board of directors, at its meeting on May 31, 2007, has approved in principle the preferential issue of up to
35,222,231 of the company's equity shares of INR10 each to members of the United Breweries Group, a filing with the Bombay
Stock Exchange reveals. The shares, which will be 26% of post
issue capital, will be issued at a price of INR155 per share.
As approved by the board, the term sheet for the issuance provides that:
1. Members of the United Breweries Group will pay no later than
May 31, 2007, a sum of INR150 crore into the company
advance which would be used as share application money
towards allotment of 96,77,419 fully paid up equity
a price of INR155 per share subject to and upon
2. In addition members of the United Breweries Group will
further pay an amount of INR3,959,445,738 to the
share application for the 25,544,811 equity shares no
than June 29, 2007.
3. There would also be a separate Shareholders Agreement among
the UB Group investors, the promoters and the company.
4. All the rights and covenants of the existing investors namely
ICICI Ventures and Capital International will cease to
upon executing the Shareholders Agreement.
The proposed preferential transfer is still subject to the approval of the shareholders, among others. According to the
company, the promoters have agreed to vote in favor of the shareholder resolution. However, if the relevant approvals
are not received the advance will be immediately refunded.
The UB Group would make an open offer for 20 percent more in Deccan at 155 rupees a share, Reuters cites UB Group Chief
Financial Officer and President Ravi Nedungadi as saying at a CNBC-TV18 interview.
UB Group is required under Indian takeover rules to make the 20% additional offer, Bruce Stanley and Eric Bellman of The Wall
Street Journal, says, adding that the potential value of the deal could come to more than US$200 million.
G. R. Gopinath reportedly would continue as chairman of the airline.
Bangalore, India-based Deccan Aviation Limited -- http://www.deccanair.com/ --
is a charter aviation company in the private sector. Deccan Aviation provides company
charters, tourism, medical evacuation, off-shore logistics and a host of
The Troubled Company Reporter - Asia Pacific reported on June 1, 2007, that Deccan Aviation has a stockholder's equity
deficit of US$2.83 million.