Heineken wants first shot at buying UB shares held by Vijay Mallya if ED seizes them

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Mumbai: Dutch brewer Heineken NV wants the first shot at buying United Breweries Ltd shares held by Vijay Mallya if they are seized by the Enforcement Directorate (ED) and later come up for sale.

Heineken filed an application to that effect at a debt recovery tribunal (DRT) in Bengaluru on Friday.

Heineken has a little over 43% stake in United Breweries, making it the major shareholder in India’s largest brewer.

The Dutch company has filed an interlocutory application seeking to implead itself in the original application (OA) filed by a consortium of banks seeking to recover dues from Mallya’s grounded Kingfisher Airlines Ltd.

Heineken has an interest in 20.9 million shares in United Breweries over which it has a pre-emptive right, its legal representative said. Seizure of the shares will affect the company’s interests, said the submission.

Until now, Heineken has been a keen but silent observer of the proceedings in the DRT initiated by a consortium of lenders headed by State Bank of India, owed more thanRs.9,000 crore by Kingfisher.

The application by Heineken comes as the Enforcement Directorate looks to seize assets in the country of the UB Group chairman, whom it is pursuing in a case of money laundering. Mallya left India for Britain on 2 March as lenders closed in on him. Mallya has a 32.8% shareholding in United Breweries worth Rs.6,724 crore. Half of these shares are already pledged with banks, but the rest can be seized.

The interest in raising stake comes amid speculation that Heineken is considering ways to get Mallya to step down as chairman of United Breweries. On 17 March, Reuters reported that Heineken is likely to ask Mallya to step down from the board.

Multiple reports have suggested that capital market regulator Securities and Exchange Board of India (Sebi) was not in favour of Mallya continuing as chairman despite being tagged a wilful defaulter.

Heineken declined to comment for this story.

Mallya was declared a wilful defaulter first by United Bank of India and later by others, including State Bank of India. The businessman has challenged the tag.

A special court in Mumbai declared the UB Group chairman a “proclaimed offender” in a loan diversion case this week.

The current DRT hearing includes the matter of an ex parte interim order passed by DRT on 17 May, asking JP Morgan Chase Bank (North America) not to disburse an amount of $40 million that has been paid out by Diageo Plc to Mallya. The money was part of a $75 million sweetheart deal that Mallya reached with Diageo for stepping down as chairman of United Spirits Ltd on 25 February. Diageo controls United Spirits.

Mallya’s legal team has approached the Karnataka high court, challenging the DRT order restricting the payout.

In 2013, State Bank of India moved a petition against Mallya after Kingfisher’s grounding the previous year under the weight of heavy debt and losses piled up since its inception in 2005.

The case gathered steam after Mallya’s $75 million deal with Diageo in February. SBI filed four interlocutory applications on 2 March seeking Mallya’s arrest, impounding of his passport, disclosure of all assets and liabilities and stopping the $75 million payout by Diageo, Mint reported on 2 March.

On the same day, Mallya left for the UK, where he continues to live. In an interview to the Financial Times on 29 April, Mallya said he was in “forced exile” and that reporting by the Indian media had turned public opinion against him.