New York: In addition to the troubles for beleaguered businessman Vijay Mallya, his US-based brewery firm is now getting affected by the legal proceedings going against him in India.
The beer company is banking on a bridge loan worth Rs 6.7 crore promised by his holding firm for survival.
"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 UBHL (United Breweries Holding Ltd) and other potential funding sources," said California-based Mendocino Brewing Company Inc in a regulatory filing.
Mallya, who is at the centre of a major controversy for the huge loan defaults by his group in India, controls over 68 per cent shareholding held through UBHL in Mendocino.
This is probably the first admission by the US-listed firm, which is struggling for funds and has been served 'default' notices by lenders in the past, about the potential impact of Mallya's legal woes in India on its own fortune. As of March 31, 2016, MBC had cash and cash equivalents of $52,900, an accumulated deficit of over $18 million, and a working capital deficit of over $12 million due to losses incurred, and debts.
If it fails to secure funds, Mendocino said, the lenders may take "recourse against the applicable pledged collateral which includes the company's real and personal property in the US and the UK".
In its latest quarterly filing with the US markets regulator Securities and Exchange Commission (SEC), Mendocino further said, "The board of directors of UBHL during this quarter has approved debt financing to the company in the form of $1,000,000 of bridge loans.
"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."
The company disclosed that its total assets declined to $16 million as on March 31, 2016 -- lower than the total liabilities worth more than $18 million.
In the quarter ended March 31, it recorded total sales of about $6.9 million, but suffered a net loss of $637,100.
Mallya got a pay package of over Rs 1.7 crore in 2015 from this US-based company, more than half of which was paid by Mendocino to him for "promoting" the company's beer brands.
Mallya serves as Chairman of the board of directors of the company, which has an exclusive licence to brew and distribute Kingfisher Premium Lager in various countries. Besides, it produces and sells a number of craft beer brands.
United Breweries Holdings Ltd (UBHL), the holding firm of Mallya-led UB Group, is the "indirect majority shareholder" of Mendocino Brewing Company (MBC).
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.
The two largest shareholders of Mendocino are United Breweries America (UBA) and Inversiones, both of which are controlled by Rigby International Corp, a company registered in the British Virgin Island.
Rigby, in turn, is a wholly-owned subsidiary of UBHL.
(With PTI inputs)
