E-Malt.com News article: India: United Breweries says Kingfisher beer brand not pledged to lenders

United Breweries Ltd said on February, 14 it fully owns the Kingfisher brand that is registered by the company under trademark classes pertaining to alcoholic beverages and that it hasn’t been hypothecated or pledged to any lender to secure loans, contradicting the contention of creditors to the airline that’s part of the UB group, Live Mint reported.

The company was reacting to reports related to the recall of loans to Kingfisher Airlines Ltd by banks and the possible invoking of items that had been pledged. A United Breweries executive who didn’t want to be named drew a distinction between the Kingfisher brand of beer that the company makes and sells and the airline’s name.

“The airline brand and the beer brand are totally different. They are covered by different patents,” this person said. “United Breweries Ltd has not pledged the beer brand (for loans to Kingfisher Airlines). So United Breweries is not affected.”

The company said as much in its filing to the BSE.

“There has also been some speculation as to whether shares in United Breweries are pledged to the lenders of Kingfisher Airlines Ltd. We wish to clarify that no shares of the company are so pledged,” it said.

On February, 12, lenders to Kingfisher Airlines said they had decided to recall all loans to Vijay Mallya’s stricken airline, kicking off the process for the recovery of Rs.7,000 crore in debt.

Bankers’ representatives said after a meeting with Kingfisher Airlines executives on February, 12 in Mumbai that they had given the promoters enough time to pump much-needed capital into the airline.

Kingfisher Airlines has been grounded since 1 October, first because of staff protests over unpaid salaries and thereafter because of regulatory issues. Its flying licence expired on 31 December, although that can be revived through a re-application.

Banks have said the collateral includes two properties of airline chairman Vijay Mallya in Mumbai and Goa worth Rs.70 crore, two helicopters worth Rs.84 crore, and shares of United Spirits Ltd (USL) and Mangalore Chemicals and Fertilizers Ltd worth about Rs.450 crore.

Lenders also have first charge on the airline’s fixed assets such as coaches that ferry passengers and tractors worth Rs.150 crore. Besides, the banks have also received a corporate guarantee from United Breweries Holdings Ltd, the holding company of UB group, and a personal guarantee from Mallya.

In addition, the lenders also said the collateral also includes the Kingfisher brand, valued at Rs.3,000 crore by audit firm Grant Thornton India.

Following the UB group statement on the brand, a State Bank of India (SBI) executive said its lawyers were examining the issue but added that lenders had excluded its valuation from its assessment of the collateral that they hold.

“The airline’s part is quite valueless, but the beer holds value,” he said.

“Our legal team is examining the proportion of assignment of Kingfisher brand for beer and airlines. At this point of time, I cannot firmly say that UB group will not be able to use Kingfisher brand in any form as we are ascertaining the assignments for beer and airlines,” the official said.

“This is the sole reason behind excluding valuation of Kingfisher brand from the collateral that we can recover against the airline’s total exposure of Rs.6,500 crore.”

15 February, 2013