Pivnoe Delo
abbey-beer-icon

pivnoe-delo_logo5

Top articles

Journals

drinktec

India. Kingfisher Beer in more trouble as RBS plans to stop services in Europe

Beleaguered businessman Vijay Mallya’s troubles with lenders do not seem to be limited to India, with the global banking major RBS planning to terminate next month a credit line and all other banking services provided to his European beer venture.

This has forced Kingfisher Beer Europe Limited, owned by Mallya through a complex web of entities, to look for alternative avenues to replace the credit line and other banking facilities provided by RBS.

Mallya-led UB Group runs its overseas brewery business through California-based Mendocino Brewing Company, which sells a number of beer brands including Kingfisher in the US, while operations in other countries are conducted through wholly-owned subsidiary United Breweries International (UK) Ltd and a step-down unit Kingfisher Beer Europe Ltd (KBEL).

Mendocino has got Mallya as its chairman and is owned by his UB Group through a complex shareholding structure. He has tried to keep the foreign operations separate from his troubled ventures in India, where a major controversy has broken out ever since he left the country amid growing clamour for recovery of dues totalling over Rs.9,000 crore of the long-grounded Kingfisher Airlines.

Mallya and his group firms are also being probed by multiple regulators and agencies including Sebi, Enforcement Directorate (ED) and SFIO (Serious Fraud Investigations Office).

As he has been evading repeated summons issued by ED, the government has now suspended his diplomatic passport.

In disclosures made to the US markets regulator, Mendocino said the Royal Bank of Scotland Commercial Services Limited (RBS) had provided an $2.8 million revolving line of credit over a decade ago in April, 2005 to KBEL. The credit line carries an interest rate of 1.38% above the RBS base rate and a service charge of 0.10% of each invoice discounted.

However, KBEL received a notice late last year from RBS regarding the bank’s intention to terminate the credit line with effect from 26 February, 2016. RBS also informed KBEL of its intention to terminate all other banking services it was providing to the company, with effect from the same date.

RBS subsequently extended the termination date to 29 April, 2016. In a regulatory disclosure, Mendocino said, “On 29 March, 2016, KBEL received a further extension of the termination date to 31 May, 2016.

The amount outstanding on the credit line as of 30 September, 2015 was approximately $813,900 (over Rs.5 crore).

“KBEL is in discussion with third parties to find alternative financing to replace the credit line and other banking services presently provided by RBS.”

In another filing, Mendocino said, “We have engaged in discussions with a bank which provided an indicative offer to provide a replacement for the RBS line of credit.”

“If KBEL does not finalize such alternate financing and provision of banking services, and if KBEL is unable to find a substitute replacement before termination of the RBS facilities, this would have a material adverse effect on KBEL and the company,” it added.

18 Apr. 2016

Advertising

pilsena_en
gea
sidel100x100
jg
portinox

Main topics

Exact matches only
Search in title
Search in content
Search in comments
Search in excerpt
Search in posts
Search in pages
Search in groups
Search in users
Search in forums
Filter by Custom Post Type
Filter by Categories
Home
Magazines
News
×