Vijay Mallya set to lose more assets

 Live Mint :Mihir Dalal &   |  P.R. Sanjai  :Wed, Apr 10 2013. 10 43 PM IST

Kingfisher lenders sell pledged shares worth millions in USL, MCF; UBHL’s stake in airline falls to 21.36%

UB Group chairman Vijay Mallya is set to lose more of his assets after lenders to Kingfisher Airlines Ltd invoked pledges worth millions of shares in United Spirits Ltd, Mangalore Chemicals and Fertilizers Ltd (MCF), as well as his grounded airline.

Mallya has investments in the UB Group companies partly through his holding firm, United Breweries (Holdings) Ltd (UBHL).

A group of lenders, led by the State Bank of India, is selling shares to recover some Rs.7,000 crore loaned to Kingfisher Airlines, as the airline— which has been grounded since October—has been unable to repay debt. The shares were pledged by the UB Group as security for loans taken by Kingfisher.

UBHL’s investment in Mangalore Chemicals slumped to just 3.44% from 24.51% earlier, the company said in a filing to the National Stock Exchange on Tuesday.

Mangalore Chemicals said that pledges equal to 10 million shares were invoked by bankers.

On 4 April, Mint reported that Kolkata-based industrialist Saroj Kumar Poddar, chairman of the Adventz Group of which Zuari Agro Chemicals Ltd is part, was keen to take over Mangalore Chemicals from Vijay Mallya’s UB Group because he believes the company is a “great strategic fit” for Adventz Group’s own farm inputs business.

Poddar’s firm owns a 10% stake in MCF acquired from UB Group’s lenders. It wasn’t immediately clear whether he would bid for more Mangalore Chemicals shares that are likely to be sold.

However, a UB Group spokesman said UB Group’s direct shareholding in Mangalore Chemicals is 21% without giving more details on the shareholding pattern.

“Besides this, the articles of association of Mangalore Chemicals gives UB Group the right to nominate three directors which gives board control as 50% of the board has to have independent directors and the maximum is 11. UB Group also enjoys the support of shareholders owning 17% of Mangalore Chemicals. Besides this, Zuari has publicly stated that they will not launch any hostile action,” the spokesperson said.

Over the past two weeks, the lenders sold 38.37 million shares in Kingfisher, bringing UBHL’s stake down to 21.36% from 24.44% earlier.

UBHL’s investment in the group’s crown jewel, United Spirits dropped to 15.73% from 17.75% after lenders invoked the pledge of 2.65 million United Spirits shares, according to a filing on Wednesday.

UB did not respond to queries on whether UBHL had pledged any more United Spirits shares with Kingfisher’s lenders.

Analysts earlier expressed concern that the sale of shares by lenders could hamper United Spirits’ deal with Diageo as Mallya may not have enough shares left to sell to Diageo.

The UK distiller agreed to buy 53.4% of United Spirits in November, including 27.4% stake from Mallya and the firm.

Diageo will follow up the purchase with an open offer to buy 26% of United Spirits from public shareholders at Rs.1,440 apiece—the price paid for the direct purchase.

The open offer began on Wednesday and will end on 26 April. However, many shareholders may not sell their shares as the United Spirits stock was trading significantly higher than the price offered by Diageo.

United Spirits stock closed up 1.16% at Rs.1813 on Wednesday on BSE. Mangalore Chemicals shares closed flat at Rs.41.30. Kingfisher Airlines stock closed at Rs.7.53 and UBHL at Rs.38