The Kanorias of SREI are mediating a possible one-time settlement between beleaguered UB chairman Vijay Mallya and the consortium of lenders to the defunct Kingfisher AirlinesBSE 3.03 % (KFA), sources directly familiar with the matter said.
Loans amounting to more than Rs 7,000 crore extended to the airline have been in default even as the State Bank of India (SBI) -led consortium is attempting to recover a part of the money by attaching assets. Mallya’s UB Group moved the courts to prevent sale of pledged assets and shares by the lenders, slowing the loan recovery process.
Kolkata-based Hemant Kanoria and Sunil Kanoria, who lead the infrastructure financing conglomerate SREI, have stepped in to mediate with the lenders of Kingfisher, given their personal ties with Mallya. “The Kanorias are helping Mallya in their private capacity because the group is no longer in merchant banking activity. They have spoken to SBI and others as Mallya indicated that this time he is keen for a one-time settlement with lenders,” said a source cited earlier.
When contacted, the Kanorias declined to comment. SREI had discontinued merchant banking services six years ago. SREI Infrastructure Debt Fund had earlier bought Rs 430 crore of Kingfisher debt from ICICI Bank, which they exited subsequently.
“The Kanorias are in talks with some of the lenders and if they get a positive response, UB Group will look forward to engage with the lenders to settle the loans,” said an official close to Mallya. He, however, added that these parleys were private and informal right now.
Mallya did not respond to calls and text messages.
Mallya, who turns 60 next month, has stepped up efforts for a settlement as the controversial loans dealt personal blows and were a drag on several UB group companies. Mallya had pledged the brand, his promoter shares in various group companies and stood personal guarantees for the loans. The debacle has seen him sell United Spirits to Diageo, and let partner Heineken raise its holding in United Breweries as some creditors offloaded the pledged shares.
Similarly, Mallya brought Saroj Poddar of Zuari into Mangalore Chemicals & Fertilizers (MCF), to buy the pledged shares which were being sold in the market. Zuari purchased additional shares and made an open offer to emerge controlling shareholders of the Bangalore-headquartered company. Mallya remains as chairman of both United Breweries and MCF, retaining most his stake.
Mallya’s bid for truce with lenders is bolstered by his possible exit from United Spirits through a negotiated deal with Diageo, which has been in the works for some time now. Mallya, who owns 4% residual stake, is expected to strike a deal at a premium to the current price, besides getting some properties that are on the company’s books currently. He, sources added, would like to secure his flagship Kingfisher beer brand from any future damages due to lender action on Kingfisher Airlines, though registered as a separate trademark.
Last month, the Kingfisher loan imbroglio took a new turn when CBI raided Kingfisher Airlines and some of the senior management regarding its probe into IDBI bank’s Rs 950-crore loan, which was given to the company despite the airline’s negative credit ratings and net worth.
