Kingfisher: HC refuses to stay creditor sale of United Spirits shares
02 Apr 2013
In a fresh blow to liquor baron Vijay Mallya, the Bombay high court today refused to restrain creditor banks from selling shares of United Spirits and Mangalore Chemicals and Fertilizers Ltd pledged as security against loans to Kingfisher Airlines.
"Ad-interim relief refused," Justice S J Kathawala of the single-judge high court bench said after hearing United Breweries Holdings and the consortium of banks led by State Bank of India (SBI).
The consortium of 17 banks are reported to have already started sale of shares of the subsidiary companies of the UB Group, which had been pledged with the lenders under an agreement in 2010, complicating Mally's plans to complete stake sale to Diageo as well.
Vijay Mallya, the promoter of Kingfisher Airlines, today filed a petition in the Bombay High Court seeking to restrain the defunct air carrier's consortium of lenders, mainly state-run banks, from selling pledged shares to recover loans.
Mallya filed the petition after reports emerged this morning that Kingfisher's lenders – mainly state-owned banks, led by the State Bank of India (SBI), were selling pledged shares of USL worth Rs100 crore.
"We are focusing on selling the pledged shares as fast as possible. Some share sale has started," SBI deputy managing director Shyamal Acharya was quoted as saying.
Mallya is close to completing a Rs11,000 crore sale of a majority stake in USL to international brewer Diageo. The mandatory open offer for 26 per cent stake in USL at Rs1,440 a share has already been launched by the international liquor giant Diageo.
It remains to be seen how this development impacts the Diageo-USL deal.
According to a filing with the Bombay Stock Exchange by UB Holdings, Diageo and its subsidiary Relay BV would acquire 26 per cent of the emerging voting capital of USL at Rs1,440 per share.
Kingfisher owes its lenders over Rs7,500 crore as of January 2012. The USL shares were pledged with banks as security for loans to the airline.
In February, the banks decided to recover part of the loans to Kingfisher by selling some of the collateral, which includes USL and Mangalore Fertilisers shares, Mallya's villa in the beach resort state of Goa, and the plush Kingfisher House in Mumbai - apart from the brand Kingfisher, which in itself was valued at over Rs4,000 crore at the time it was pledged.
Meanwhile, a Reuters report quoting a company source said Kingfisher Airlines has paid its staff salaries for June and July 2012.
Kingfisher, which has been grounded since October 2012, owes an estimated $2.5 billion to banks, employees, airports and oil companies.
