New York - Former billionaire Vijay Mallya had been a white knight for California's Mendocino Brewing Company. Not anymore. The beleaguered businessman's legal and financial troubles in India have now come to haunt the US craft beer maker which is pressing Mallya for a $1 million bridge loan promised by his holding company United Breweries.
In the 1990s, Mallya bought a sprawling mansion in California's Sausalito wine country filled with paintings by Picasso, Renoir, Chagall and Turner. He also bought two yachts, American vintage cars along with other expensive baubles. In 1997, he then poured money into Michael Laybourn and Norman Franks' Californian brewing company Mendocino for a 68 percent stake.
At the time, Michael Laybourn, one of the founders of Mendocino Brewing Co., said Mallya helped "save his firm"; giving it an infusion of capital, acquiring other companies, and providing great synergy by putting it in charge of Kingfisher's American operations.
However, times have changed. Mendocino doesn't appear to be doing well financially and has requested funds from the parent company. Options are being explored, including a merger or asset sale. Mendocino, which brews Red Tail Ale, Blue Heron Pale Ale, Black Hawk Stout, Peregrine Golden Ale, and seasonals for the US craft beer market, is struggling. It is now a penny stock traded over the counter with a market cap of just over $3 million.
"Vijay Mallya, the company's chairman and indirect majority shareholder, is presently subject to certain legal proceedings in India, which may impair the company's ability to obtain financing from United Breweries Holding Limited (UBHL) and other potential funding sources," Mendocino Brewing Co. said in a regulatory filing.
"If UBHL does not consummate such debt financing, it would have a material adverse effect on the company's financial condition and the company's ability to continue to operate."
Mallya serves as chairman of the Board of directors of Mendocino, which has an exclusive license to brew and distribute Kingfisher Premium Lager in various countries. Mallya got paid a package of $256,900 (about Rs 1.71 crore) in 2015 from Mendocino, according to the Californian brewer's annual Form 10-K filing.
Mendocino's North American operations primarily consist of brewing and marketing proprietary craft beers. Its foreign operations are conducted through wholly-owned subsidiary United Breweries International UK Ltd (UBIK) and a step-down unit Kingfisher Beer Europe Ltd.
Published Date: May 23, 2016 08:21 am | Updated Date: May 23, 2016 08:21 am