Liquor baron Vijay Mallya led United Breweries Limited (UB) will reportedly infuse $2 million into American based Mendocino Brewing Company (MBC).
The UB group holds 68.1 per cent in the company while United Breweries of America owns 24.5 per cent in the company, it was reported. In a regulatory filing, the company said that the Bangalore-based distillers has agreed to “favourably consider additional investment to underpin growth based on detailed business plan to be submitted in due course” by MBC.
Mallya’s other ventures such as Kingfisher Airlines (KfA) has been grounded for want of fresh fund infusion. UB has committed to making four half yearly instalments with the first instalment to be remitted expeditiously, it was reported.
MBC is reported to have only $40700 cash reserves, an accumulated deficit of $14.27 million and working capital gap of $7.2 million. Subsequently the company is said to have slipped into losses in the July-September quarter.
The investment commitment has been communicated by UBHL through a letter addressed to Mendocino CEO Yashpal Singh, a copy of which has been filed with the SEC. UB Group chief Mallya also chairs the board of Mendocino.
UBHL said it would prefer infusing money by way of ordinary voting stock and it has asked Mendocino to advise it on modalities for equity infusion after a board discussion.
Back home, the UB Group is facing difficulties at its aviation venture Kingfisher Airlines for quite some time. The carrier has been grounded since October 2012, primarily due to mounting debt and rising losses, as also non-payment of wages.
The lender consortium has been asking promoters to infuse their own funds into Kingfisher, but no headway has been made despite numerous rounds of negotiations and banks have begun a process of recovering their loans worth nearly Rs 8,000 crore. Kingfisher’s accumulated losses have ballooned to over Rs 16,000 crore and it is yet to make a single full-year profit since starting operations in 2005.