According to information provided by two people having direct knowledge of the Vijay Mallya case, the Enforcement Directorate (ED), through a consortium of banks led by the SBI, has informally conveyed to Heineken NV, the part-owner of United Breweries (UB), that it intends to allow banks to auction Vijay Mallya’s shares in the company that the banks had attached once the court grants its approval to the agency for the same.
According to reports, one of the two people who passed on the information confirmed that if the shares are sold at the earliest it will yield good returns. The investors and lenders are keen to get going with the process of selling the shares at the earliest.
“Heineken has shown interest in buying the shares at a premium and we will let them claim it once the court approvals are in,” the person said.
The investigating agency has attached 41.3 million UB equity shares held by eight promoter firms, equivalent to a 15.63 per cent stake. Heineken owns about 44 per cent of UB, which was once headed by Vijay Mallya who holds about 8 per cent. Almost 23% of the shares held by the UB promoter and promoter group are pledged.
The Enforcement Directorate confirmed that they would give their approval to sell both pledged and unpledged shares once it gets approval from the special court in Mumbai hearing cases under the Prevention of Money Laundering Act (PMLA). The next hearing is scheduled on March 13.
While Heineken refused to comment, an official familiar with the case said, “All Mallya’s assets are the property of the government and post-ED approvals, banks will be able to sell the shares and recover their money.”
“It is just a matter of time. With the additional shares, Heineken will have all the heft it needs on the United Breweries board. The next move is a Heineken-nominated chairman,” said an official close to the board.”
“In the past, banks had expressed reservation towards United Breweries Holding Ltd. and Mallya’s proposals for settlement, but now there is a view of selling the shares even before the extradition process begins,” furthered the same official.
“Heineken has already kept its war chest ready to purchase the maximum shares available with both lenders and the ED,” another person close to the Dutch brewing company said.
The ED expects the sale of shares to surpass Rs 9,500 crore, the amount Mallya owes the local lenders.
“The sale of shares alone would help us recover both the principal and interest and even make a considerable profit. We are hoping to make around Rs 13,500 crore from the sale of all the assets, including shares and immovable property,” the first person said.
Upon approval from the PMLA court, the banks will start the share sale in accordance with the method prescribed by the Securities and Exchange Board of India and may hire SBI Capital to conduct the auction.
Shares of UB closed at ₹1403.70 at the NSE today, giving it a market capitalisation of ₹37,121.16 crores.
Vijay Mallya is wanted by investigating agencies in India on the charges of Money Laundering, Fraud and violation of Foreign Exchange Management Act (FEMA). His Kingfisher airlines owe around ₹9000 crore of debt to creditors, and Debts Recovery Tribunal (DRT) has attached a significant amount of properties belonging to Mallya.
Mallya left India for London in March 2016 soon after lenders to his defunct Kingfisher Airlines declared him a wilful defaulter.
UK home secretary Sajid Javid approved Mallya’s extradition to India on February 3. Mallya has 14 days to appeal.