The Dutch brewing giant Heineken has become the largest shareholder of Vijay Mallya’s United Breweries Ltd (UBL), raising questions about who should now manage the firm. This is important because some of Force India’s funding comes from the UB empire, which has already lost control of United Spirits, which is now run by Britain’s Diageo. The changes are the result of the empire becoming overextended by Mallya’s desire to run Kingfisher Airlines, which is now basically defunct with huge debts. Mallya is fighting to hold on to what remains of his empire, with creditors circling his wagon train wanting their loans repaid.
All of this raises questions about the money supply for Force India, particularly as Mallya’s partner on the business, Roy Sahara is himself in trouble, having been ordered by the Supreme Court to repay investors to the tune of $3.2 billion.
The team continues to say that all is well – which is good news if it is true. However, the word is that Force India will be taking a driver with money in 2014 and we have even heard that Hulkenberg might be switched to Lotus if the Enstone team gets money from Quantum, which would it to offload Pastor Maldonado to Force India. That may sound fanciful, but in F1 nothing is ever impossible, so it will be worth watching.
Heineken bought 1.3 percent of United Brewery shares on Tuesday from Citicorp, raising its share to 38.7 percent. Mallya owns 37.4 percent. The shares purchased are reported to have been pledged as collateral for a loan made by Citicorp to UB Group, the parent company of UBL.
They key question now is whether Heineken tries to replace the current UBL management, led by Mallya.
In addition to his financial problems, Roy Sahara is now also facing charges of criminal contempt, issued by Supreme Court on Monday in relation to an investigation into the 2G Spectrum Scandal that allegedly involved politicians and government officials illegally undercharging mobile phone companies for 2G licences. Sahara is accused of having tried to interfere with the justice system.
Whatever next?
joeblogsf1 
Last years sale of united spirits netted Malya $2.1Billion and it’s said he owes out about $1Billion, so he has some spare it’s just not clear what he intends doing with it.
No, he owes $2.5 billion and there is money owed all over the place.
Interesting. It might explain where the rumours about a Dutchman talking with buying something from Mallya came from (although “reports” that VdGarde’s father in law was looking into buying into the FI team were clearly quite a bit amiss).
As you mention, FI might currently be fine for money (they get a bit more from this years campaign and maybe both Mallya and Sahara put money into the team up front to have it out of reach – I guess Mercedes would have gotten some guarantee for supplying engines), but in the mid term they seem to have quite a big question mark over where the funding is going to come from.
Another thing Joe. Do you have any information on Sutil and him having a contract with FI to race next year (which the team would have to solve if they want a different driver)?
If he had a contract they would have announced it when they announced Hulkenberg, wouldn’t they?
That’s what would make sense yeah! But if he would have a contract, but FI is now trying to get a driver in the car who brings funds …
Would make sense to split the announcements if you want to double your media return.
Joe…do you really think that waiting for Quantum to reappear and shifts everything out of place isn’t being naive? Because I’m willing to wait til the red lights come off….I’ve never guessed that I’ll see Maldonado in Lotus impeding Hulkenberg’s arrival.
If I thought it was naive, I would not be considering it as being possible!
I take my hat of to the team and drivers for getting the results they have done with all of this going on. I’d have been interested to see where they would have ended up without the mid season tyre change.
For anyone looking for a team to buy they must be quite a nice target, distressed financially but with a good base.
The problem is – who would want to buy a team at the moment? Better to wait until the cost cap has been locked in, thereby giving some further certainty.
FIA have just announced room for a 12th team in 2015.
I’m quite tempted to snap up the 1997 Lolas that are on Ebay at the moment and have a crack at it myself… 🙂
Interesting development, as always you are on the ball. For Citi to liquidate the pledged shares, this would imply that they took ownership, i.e. that the borrower defaulted on the loan. I wonder what else was pledged, if anything??
There are a number of “parcels” been passed around certain financial – funds ect… to see if there is any appetite for them, and what might be a price someone is willing to pay.
You are left wondering what has he left to sell, given that most of the “holdings” we know about, appear to be pledge for one thing or another.
You are correct, there is that thing called cash flow, and it appears he is rather low on that small point, hence can’t service the loans.
But he still seems to have his toys, 2x jets and a rather large floating Gin Palace, these things do cost a fair amount of liquid cash to keep a float or in the air these days, so one assumes money is somewhere else to support them.
And his employees?
He appears to look after his own “creature comforts” first, and then worry about those other little things. He seems to rather enjoy spending money,than trying to save or economise on things, like normal people do when faced with mounting debts, but then again one could say he isn’t like the rest of us, who actually worry about how we will pay our bills.
All I can add, is that he is been forced to services his obligations to certain financial Institutions, but for some very strange reason doesn’t want to. A lot of people think this is because it will expose where the liquid funds have been hidden. The “toys” of course are still been paid for.
As one member of the F1 team has been recently quoted as saying, if he sold the Gin Palace that would keep the team running for a few years.
Are there any potential suitors waiting in the wings ready to buy this team in case things go poof? I’m guessing no which is a sad reflection on the sport considering this is a fairly solid team.
The good doctor has proven that employees are not exactly a priority so one hopes he is made an offer he can’t refuse for the sake of the team personnel. If you can put Johnnie Walker on a car then why not Heineken? Bring on the global beer giants F1 needs the dough!
In reality he’ll hang on to the bitter end, look world – yacht & F1 team – all must be good!
Whatever next? Surely the revival of your once bustling betting pool on the next F1 team principal to visit pokey…
Back to Quantum again? . I guess for every persistent optimist there is a mirage that refuses to quit the horizon. But when does even that optimist recognise and accept that it will be “TOO LATE”? Christmas? First track tests? Melbourne? Beyond that??!!
This must be giving poor Pastor anxiety attacks.
I know all the amateurs out there know better than the F1 journalists who talk to the people involved but what can I do? I write what is going on. If you don’t believe it, that is up to you, but the whole thing continues to roll onwards. Let’s see where it ends up.
It’s a good reminder that nothing is totally fixed in place until the first race. I think a lot of people (myself included) have now considered it a closed deal once official confirmation is given that Maldonado will be driving a Lotus, Hulk and Perez a Force India, and that Force India could be strong next year, while Lotus, Sauber could move backwards with cashflow problems, while Williams will be resurgent once more. While 2014 brings great opportunities to move forwards, there are also monetary pressures, and this must always be considered first and foremost. Everything else then falls into place.
Razia was even driving at the pre-season tests last year, but come Melbourne, it was Bianchi in the car.
Whatever next? How about the FIA giving double points for Abu Dhabi? There’s a comedy if there ever was one!
Quite a soap opera this year with the driver market, don’t think I’ve seen it so unsettled this late in the year though I’m sure it’s been in the past.
I can see where Diageo would not cut funding for Force India sponsorship since they are already involved in motorsport sponsorship. But I’m less sure Heineken are in that position so the funding may be at higher risk. Whatever next seems quite right…
Happy holidays Joe, from Bill on the media staff in Austin.
Hey Joe, is this love or only for the money?
I have no idea what your comment means. Perhaps someone else does?
I think he’s hitting on you?
..and willing to pay?
Thanks for the update Joe. Hopefully this isn’t the only positive comment in a tide of negativity and accusations of vendettas and personal issues with the owners.
Does India actually have a credible justice system that isn’t manipulated by whichever direction the wind might be blowing.
One would think Roy isn’t short of a quid and they are playing games because I would bet they could pay the money if they wanted too. Mallya obviously is having problems and will likely loose control of his companies but I doubt that he will ever be really broke.
Maybe Force India could be the next Marussia “merger” target…
Both based in a similar area (country at least), both could likely do with a few more $$$ in the kitty and Force India generally produce tidy cars that give reasonable bang for the buck.
All of this continuing uncertainty means DiResta will have his contingency plans well in train now as his future with FI looks even bleaker than it did a month ago. The drivers were supposed to be announced after the Christmas party and that has come and gone and still only one driver announced. It does give the feeling that these last driver places are all interrelated (stating the obvious).
On the topic of di Resta, perhaps Mallya will remember he has a few billion stashed away that he’d “totally forgotten about” as did di Resta’s (ex-)manager…!
….maybe it’s in the same box as the lost Blackberriys and computers.
What happens if there aren’t enough teams to fill the grid as per the agreement between FOM and the FIA?
Three car teams are expensive and it seems some teams are struggling financially to make the grid, or do they receive financial incentives to make up the numbers?
It won’t happen.
How confident are you that 11 teams will be on the grid in Oz next March?
Very
How do you know if some of the teams at the back of the grid aren’t being partly subsidized, secretly by FOM, to make up the numbers?
Sounds outrageous, and not referring to any particular season…
Of course they are. It’s been going on for decades.
Wonder where this will all end??
Would appreciate some proof reading please – seeing LOTS of incomplete sentences , such that I have to re-read to try to make sense – see “which would it to offload” above – do I insert ‘allow’ somewhere? Similar problem in the next item about teams and testing schedules.
jp
I am afraid that I do too much in life and I am not good at proof-reading. I used to be, but I seem to have lost that skill. I try but my brain reads the words I know are coming, not what are really there. One should not proof read one’s own articles. Unfortunately, I am a one man band and in addition to being nice to you lot, I do actually have to earn a living…
I’ll employ a proof reader. Will you pay for it? Hmm… Thought not.
I tell you waht a reckon a fair few of us would act as proof readers for free just to read the news an hour or two ahead of everyone else!
You reckon you get an hour these days? No way. It’s minutes.
Joe,
Its been two years and waiting for King Mallya to fall off his perch. But he is still hanging in there and pretty well if you consider his F1 sojurn (as u consider it one). One does get a feeling that you are so waiting for it to come crashing down so that you can proclaim… “Look you amatuers (read as fools), I told you so! ” :D.
Your posts are accurate and factual, just that Mallya is still pretty thick with his existence, given his businesses and ownership/loans are so layered, guess its going to be a while before you might actually see him walk into oblivion.
You keep hinting at paddock talk on Force India. They have always been desperate to eek out cash from anywhere, so whats new here ?
The last thing you do when you are right is to say “I told you so”. That makes you look like an arse. Perhaps some wise commenter will spot that you were right and point this out. If they don’t, so be it. I don’t know what will happen with Mallya and I don’t much care. He is a less than charming and scrupulous individual, in my opinion, based on the way he has treated his staff and his creditors. If he falls over I’ll not weep for him but I really could not care less about him. What is important to me is that the sport and the team are not taken by surprise if his house of cards gets blown down.
It may not, but the trend is not upwards, is it?
Joe,
A team which happens to have consistently improved year on year(best of midfield), happens to hire the best and arguably the second best experience talent available as part or multi year contracts for 2014(willing to even pre-pay one of the hires as part of the contract), ties up with whats touted to be the best engine for 2014, it doesn’t show any downward trend for sure if not radically upwards.
Now if your intent with these posts on Mallya is to be ‘Joe-the-saviour’ to friends and family employed with Force India, i.e apart from Mallya being part of your ‘business as usual’ F1 reporting, then I’d say the intentions are good but it is ridiculous to assume joeblogs is the beacon on all knowledge about the affairs on Mallya to folks in F1 or the ones employed in Force India. Even more so, given that in this day and age there’s Google and most of data points that you share are publicly available and inferences easily deduced. Now, if the people employed at Force India haven’t googled or researched enough on Mallya’s present financial standing and financial commitment to the Force India F1 team, then there is a serious problem with them and you might as well write a personal mail to them, to serve you cause better!
It is my blog and I do with it as I please. You are a visitor and should behave as such.
Mallya’s going to turn it around any day now, just dust off your Kingfisher Airline tickets and you’ll be good to go.
Leveraging is great on the way up, on the way down – not so much. Keep believing the good doctor is going to pull a rabbit out of a hat – further human collateral damage is the probable outcome. The tasteless ostentatious behaviour under these circumstances is where most folks draw the line on this man.
How come we seem to be getting a lot of the disbelievers on lately Joe?
Don’t know. Don’t care.
Hi Joe,
Force India is only a tiny part of Mallya’s and Roy’s interest in sports in India. Regarding the Heineken share deal, from what had been reported, Mallya is still going to have his say http://www.business-standard.com/article/companies/heineken-takes-a-bigger-swig-of-ub-113121100016_1.html. Mallya’s real issue is that he is still trying to revive his airline.
Roy’s Sahara has been a big sponsor of sports in India from the Olympic team to until the end of this year, the Indian cricket team till it got into trouble with BCCI over its Pune franchise in the IPL. It has a long standing reputation as being a fair player in India despite all its legal wrangles and yesterday pledged documents to the market regulator pertaining to the refund of the monies owed to creditors, of which, it claimed to have refunded most of it http://economictimes.indiatimes.com/markets/regulation/sahara-pledges-25-per-cent-of-aamby-valley-with-sebi/articleshow/27235630.cms.
F
Joe,
“we have even heard that Hulkenberg might be switched to Lotus if the Enstone team gets money from Quantum, which would it to offload Pastor Maldonado to Force India.”
I’m having a hard time believing that. Why go through the trouble of announcing drivers, making them give interviews about how excited they are to join the team, only to get someone else a few months before the start of the season? Given the considerable sponsorship Maldonando is rumored to be bringing, it’d be strange for him to consent to a situation like this. Good thing the Quantum investment seems quite unlikely, we’ll never have to hold you to your word!
I did not say it would happen. I said that I heard it could.