Emperador unit gets P15.3B loan

Screengrab from www.emperadorbrandy.com

MANILA, Philippines–A unit of Philippine beverage-maker Emperador Inc., which recently won an international bidding for iconic Scottish scotch whisky-maker Whyte&Mackay, has obtained a £210 million (P15.3 billion) loan from international banks.

Emperador International Ltd. (EIL) availed itself of the loan from HSBC (Hong Kong Branch) and JP Morgan Chase Bank (Singapore Branch) with a tenure of one year and an interest rate pegged at a spread of 1.25 percentage points a year over the London interbank offered rate (Libor), based on a regulatory filing. One-year Libor is at about 0.54 percent a year as of Tuesday.

Together with flagship unit Emperador Distillers Inc. (EDI), Emperador guaranteed the loan contracted by the wholly owned subsidiary.

The parent conglomerate of Emperador, tycoon Andrew Tan-led Alliance Global Group Inc., has also notified its bondholders of the additional guarantee issued by Emperador and EDI.

“The loan will be used for general corporate purposes related to the core business of beverage,” Emperador said in a disclosure to the Philippine Stock Exchange on Tuesday.

The latest borrowing accounts for about 49 percent of the cost of acquiring Whyte&Mackay. Officials earlier said that about two-thirds of the requirement would be covered by debt and the balance by equity.

Emperador is now awaiting regulatory approvals of its £430-million deal to take over the European beverage firm. The Dalmore heritage of its distillery can be traced back to King Alexander III of Scotland in the year 1263.

Last May, Emperador outbid a number of global consumer powerhouses such as French luxury goods conglomerate LVMH Moet Hennessy Louis Vuitton SA, American liquor-maker Brown-Forman (makers of Jack Daniel’s whisky), Gruppo Campari of Italy and Russian billionaire Roustam Tariko, producer of Russian Standard vodka to bag a deal to take over Whyte&Mackay.

India’s United Spirits Ltd. agreed to sell its Whyte&Mackay scotch whisky unit to satisfy British antitrust concerns. The acquisition is awaiting clearance from the Reserve Bank of India, whose nod was needed because the sale would result in a significant write-off of loan amounts recoverable by United Spirits from its British subsidiary.

Previously, United Spirits was owned by Indian tycoon Vijay Mallya, who had to sell out after the collapse of Kingfisher Airlines. But as Diageo’s takeover of United Spirits was feared to jack up whisky pricing in the United Kingdom, the sale of Whyte&Mackay was made to ease regulators’ concerns.

For Emperador, the investment is part of its expansion road map in Europe, the first among Philippine conglomerates to do so in the beverage space in recent history.