Mallya may sell UB stake to Heineken; keep Kingfisher airborne
29 March 2012
Liquor baron Vijay Mallya is close to selling a 13 per cent stake in United Breweries to Heineken - which would give the Dutch brewer control of India's largest beverages group, according to a Financial Times report citing sources.
Others agree that Mallya is seeking to sell a part of his beer and spirits empire to keep his sinking Kingfisher Airlines afloat. Diego Plc is reported to be eyeing a stake in United Spirits Ltd, the distillery arm. Earlier potential deals have failed to fructify over divergences on the company's valuation.
The deal would increase Heineken's holding in brewing arm UB from 37.5 per cent to more than 50 per cent, and could be worth as much as Rs2,500 crore, according to Financial Times.
A sale of Mallya's personal stake could help the flamboyant billionaire inject fresh liquidity into Kingfisher Airlines, named after his best-selling beer brand.
Unlike people imbibing UB beer, Kingfisher is far from flying high. It is operating skeletal services as it struggles to pay its staff and service its debts. Most of its assets, including properties and even office furniture, have already been mortgaged.
Mallya has been trying to cut costs to persuade bankers to lend the carrier more funds, but its major lenders like the State Bank of India and ICICI Bank have so far refused to oblige. In fact, ICICI has asked it to either pay part of its debt or provide more assets as security.
However, if Mallya manages to use some of the cash raised through the UB deal to pay back some of the debts the airline has accumulated, the banks might reconsider their position.