Lenders get back Rs 5,824.50cr from Mallya’s UB share sale – Times of India

MUMBAI: The Debt Recovery Tribunal (DRT) on behalf of a State Bank of India (SBI)-led consortium of lenders sold shares of United Breweries worth Rs 5,824.50 crore of fugitive businessman Vijay Mallya on Wednesday.
The shares, which represent a 15% stake in Kingfisher Beer-maker UB, were bought by existing shareholder Heineken which now has control.
For banks, the recovery covers up their principal claims and a substantial part of the total claims of Rs 9,900 crore from Mallya. As the loans to Kingfisher were completely written off, the recovery could boost their profits in the first quarter.
The recovery was made possible because the Enforcement Directorate (ED), in a money laundering case, confiscated the shares which were assets of Mallya. These shares were owned through seven companies, some of which were ‘paper companies’ controlled by the liquor baron, according to enforcement authorities.
Banks had earlier recovered Rs 1,357 crore, with assistance from the DRT by selling Mallya’s shares in UB and United Spirits Ltd (USL). They are now in the process of selling Rs 800 crore worth shares in United Spirits and aim to conclude the sale before June 25.
The block deal was executed through a special arrangement between ED, the SBI-led consortium of 17 banks and Heineken, current owner of UB. The block deal was executed before the opening of the stock exchange to prevent an impact on the share price.
Post-confiscation, the ED was recorded as the owner of these shares by the stock exchanges. Recently, with court permission, the ED transferred ownership of these shares to SBI after ensuring that Heineken, in principle, agreed to purchase these shares. In all, the ED has transferred attached assets worth Rs 8,442 crore to public sector banks in investigations pertaining to the triumvirate of fugitive economic offenders-Mallya, Nirav Modi and Mehul Choksi.
The trio had caused a collective loss of Rs 22,586 crore to banks. Using the Prevention of Money Laundering Act (PMLA), the ED had attached assets worth a total of Rs 18,170 crore linked to the trio in India and abroad, which is around 80% of the total loss caused to the banks.
Mallya, a fugitive economic offender, is in the UK and the government of India is trying to extradite him in the case. He has been denied permission to appeal against the extradition by the UK Supreme Court. Under the law, once the court declares an accused fugitive economic offender, the government agency can confiscate all his properties-even those not associated with the crime-and after court confirmation, it becomes government property that can be auctioned to recover the loss.
Mallya took bank loans on his personal guarantee, a corporate guarantee of UB Holdings and an inflated brand guarantee of the now-defunct Kingfisher Airlines. The loan was taken for operating expenses of Kingfisher Airlines but was used for other purposes, including procuring a luxury aircraft for Mallya’s personal use and properties.
Following defaults in loan repayments, the loan to Kingfisher Airlines was classified as a non-performing asset almost a decade ago.