Bank fights Mallya MCF bid: Will KFA claim another UB firm?

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Moneycontrol BureauThe United Bank of India (UBI) has written to Securities Exchange Board of India (Sebi) asking it to reconsider the approval given to the joint open offer by Vijay Mallya’s United Breweries and Suraj Poddar’s Zuari, proposing to acquire additional shares in Mangalore Chemical and Fertilisers (MCF).According to a report in the Business Standard that quoted persons privy to the development, the bank has asked the regulator to reconsider the approval as it had identified Mallya’s now-grounded airlines, Kingfisher, a ‘wilful defaulter’ – a move the latter has reportedly challenged.UBI is one of the lenders to the Mallya’s now-grounded airlines, which has been reeling under a Rs 6,500-crore debt burden.According to RBI rules, a ‘wilful defaulter’ is someone who has the capacity to pay back their obligation but does not.The UB-Zuari joint-open offer is the culmination of a three-way battle for MCF’s control between UB, Zuari and Shailesh Mehta’s Deepak Fertilisers.Zuari owns about a 16 percent stake in MCF, Mallya’s UB Group owns about 22 percent (though most shares are pledged to lenders) while Deepak owns little over 25 percent. All three firms operate in the fertilizer business.Following Mallya’s Kingfisher woes, Deepak went in for a hostile takeover of MCF, and after slowly inching up its stake beyond the 25 percent threshold, it declared the mandatory open offer to acquire another 26 percent in the firm for Rs 63 per share.After this, Mallya teamed up with Poddar and they declared a joint open offer that trumped Deepak’s by Rs 5.5 (at Rs 68.5).Reports say as per the agreement between the two, if the joint open offer goes through, Mallya will have a significant say in how operations are run at MCF.If Sebi rescinds permission for the joint open offer on the basis of UBI’s complaint, it would result in a further setback for Mallya’s whose UB Group has already been displaced as the largest shareholder in United Spirits and United Breweries.Apart from Sebi’s approval, Deepak’s open offer has also got approval from the Competition Commission of India while the UB-Zuari joint open offer is yet to.Recently, there were reports Deepak was considering backing off from the heated control battle – now into its second year – and was unlikely to bump up its offer price beyond what UB-Zuari were willing to pay for MCF shares.But the latest development could come in as a shot in the arm for the Pune-based fertilizer firm.