India/UK: 16% stake in United Breweries to be sold

A consortium of Indian lenders, led by the State Bank of India, have initiated talks to sell a 16.15 per cent stake in United Breweries (UBL) belonging to fugitive liquor baron Vijay Mallya. The most likely buyer for the shares which are valued at INR 5,500 crore (USD 760 million) and which will be sold via block deals is Dutch brewing group Heineken that already owns a major stake in the Indian brewing group.

The consortium moved a step closer in their attempt to recover dues after the High Court in London upheld an application on Wednesday to amend their bankruptcy petition, in favor of waiving their security over his assets in India.

Earlier last week, the Prevention of Money Laundering Act Court in Mumbai had restored Mallya’s properties seized by the Enforcement Directorate (ED) from Mallya to banks that had granted loans to the business man who is still listed as non-executive UB group (UBHL) chairman. The ED had seized assets worth INR 9,000 crore (USD 1.24bn) from the fugitive businessman in connection with money laundering.

The lenders are seeking to recover more than INR 6,200 crore (USD 869 million) from Mallya along with interest of 11.5% per annum payable since 2013. The businessman and former Member of Parliament, who is known as the King of Good Times for his party lifestyle, suffers from the collapse of his Kingfisher Airlines in 2013 which was heavily indebted with bank loans of about INR 7,200 crore (USD 1.1bn).

Already in 2012 Mallya was forced to give up control in United Spirits, the third-largest manufacturer of spirits products in the world, which he sold to market leader Diageo in a USD 2 billion deal. As most of the transaction proceeds were received in overseas accounts the money was not used to repay the debts (, 12.1.2017). In the meantime, most of Mallya’s other posessions in India have been confiscated and sold including his huge beachfront Kingfisher Villa in Goa, India (, 19.4.2017).

UBL published last month its results for the financial year ended March 2021. The full year free operating cash flow was at INR 440 crore (USD 61m) which was INR 362 crore (USD 50m) higher than last year. The company reported an 10& EBITDA margin despite a 39% volume decline. Especially in the last two quarters, the business saw a sharp recovery after a difficult and challenging first and partly also second quarter.

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