Indian billionaire Mallya might be forced to sell Kingfisher

Vijay Mallya, Indian billionaire, who had fled in March to England to escape creditors and Indian tax authorities, may be forced to step down as head of the board of United Breweries Ltd (UBL) and sell a major stake in India’s leading brewer to Dutch brewer Heineken. Heineken bought a 37.5% stake in United Breweries in 2008 through its takeover of Scottish & Newcastle and has since increased its interest to 42.4%. This week Heineken acquired another 0.7 % from private sector lender Yes Bank, hoping to increase its stake soon over 50%. Mallya might be forced to sell part or the entire holding in the brewery, which is widely known for its Kingfisher Beer to settle the claims of creditors.


In 1983 aged 28 and following his father's death, Mallya became the Chairman of United Breweries Group, nowadays a conglomerate of enterprises involved in beverages, aviation, electrical and chemical fertilizers. Mallya, who is known as the King of Good Times for his party lifestyle, suffers from the collapse of his Kingfisher Airlines in 2013 leaving unpaid wages and angry creditors. Already in 2012 he had be forced to give up control in United Spirits Ltd,  the third-largest manufacturer of spirits products in the world, which he sold to market leader Diageo in a $2 billion deal. As most of the transaction proceeds were received in overseas accounts the money was not used to repay loans to Indian banks in 2012 which lent Rs 7,200 crore ($1.1bn) to Mallya-owned Kingfisher Airlines.


Mallya became internationally better known through its co-ownership in Formula One team Force India, which he acquired in 2007 for €90 million together with Dutch businessman Michiel Mol. Currently Force India ranks 4th in the highest class of single-seat auto racing climbing continuously 6 ranks up in the last 9 years.


Besides UBL Mallya might also sell soon his other interests in the beer industry. In 1997 he bought through his United Breweries Holdings Ltd (UBHL) 68% of Mendocino Brewing Co. (MBC) in the Mendocino County town of Hopland, California, which is known for its Red Tail Ale, Blue Heron Pale Ale, Eye of the Hawk Select Ale, and Black Hawk Stout. The company also has an exclusive license to brew and distribute Kingfisher Premium Lager in various countries. Last year MBC’s turnover was USD 31.2 million whereof Mallya received a compensation of $256,900 (Rs. 1.71 crore), unchanged from the previous year for services rendered as Chairman and for promoting the products abroad and outside the United Kingdom.  As “current revenue from operations are insufficient to meet the working capital needs of the company over the next 12 months" (statement by MBC), MBC is now also on the sales list. Last December, MBC hired an investment banker to explore  “certain strategic and financial options and transactions or the sale of substantially all or a material portion of the assets“.

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