Beer buyout

The media had been speculating for months about buyers emerging as strong contenders for the troubled Cobra Beer. The announcement finally came at the end of May. "North American brewing giant Molson Coors will pick up 50.1 percent in Cobra Beer’s UK operations, giving a lease of life to the company hobbled by huge debts and slumping demand in its key market,” reports The Economic Times (ET), May 31, 2009. "Cobra’s Indian operations have been separated into an independent company fully controlled by the Karan Bilimoria family but discussions to raise money from private equity investors are going on,” the paper notes.

Cobra Beer outside India will be run by a joint venture (JV) between Molson Coors and a new company called Cobra Beer Partnership Limited controlled by Bilimoria. "Molson has reportedly put in £14 million pounds to pay off Cobra’s secured creditors and will now win control of a debt-free business that Bilimoria tried to sell last year,” writes The Indian Express, May 31. Unsecured creditors may be faced with unpaid bills, adds ET. "‘We feel that this deal represents the best outcome for the business, secures the rights of the employees and will ensure the Cobra brand continues to exist,’ stated PricewaterhouseCoopers who had been appointed administrators,” writes www.redhotcurry.com/business "We had no choice but to go down this route,” Bilimoria is reported to have told The Sunday Times (May 31). "I feel terrible about that. I feel gutted that the unsecured creditors aren’t going to be paid back.” Neither of the partners of the JV can exit for 10 years. "We will decide on the quantum of capital required for India in the next few weeks and start a fresh process almost from scratch. We have the perpetual licensing rights for the Cobra brand in India, which we can assign to anyone,” ET quotes Bilimoria.