Mallya offloading stake in United Spirits to save Kingfisher Airlines?

Will Vijay Mallya offload a minority stake stake in United Spirits to Diageo to raise cash for the beleaguered Kingfisher Airlines?

According to the Economic Times, United Spirits could raise funds through the stake sale to Diageo which it would then use to revoke its pledges on shares of the company.

[caption id=“attachment_287713” align=“alignleft” width=“380” caption=“Mallya has denied selling stake to raise funds to save the airline. Reuters”]  [/caption]

The deal is reportedly still in its initial stages and Diageo might buy upto 26 percent of stake in the Indian spirit maker through the deal, the report said. United Spirits has a market capitalisation of Rs 9,100 crore based on the stock’s Tuesday’s closing price.

The stock was up 1.5 percent today against the Sensex which was up 0.18 percent. United Spirits has pledged 94.42 percent of its total promoter holding.

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Diageo was quoted in the report as saying that they did not want to comment on the deal.

However, Mallya said the two companies were in touch with each other but said they were not planning to sell stakes in order to repay debt in Kingfisher Airlines.

“Diageo and ourselves are in constant touch with each other exploring joint business opportunities in this rapidly evolving market. In specific response to your query, we are not in any discussion with JM Financial. There is no question of selling our stakes in our core businesses to invest further or to repay debt in any business, including Kingfisher Airlines. We have other opportunities to access the necessary funding,” he was quoted as saying in the report.

The report comes even as Kingfisher Airlines shares hit a new record low on Tuesday and the airline continues to struggle with limited operations.