Vijay Mallya, the co-owner of Sahara Force India F1 team, has come under intense pressure from 17 creditor banks in India, who have lost patience and announced they are calling loans on his failing Kingfisher Airlines business, which is $1.3 billion in debt.
The airline has been grounded since October last year, the debts mounting up. And according to the Financial Times newspaper today, some of Mallya’s trophy assets are being targetted as banks look to recoup their losses, “Now that his creditors have run out of patience and are calling in loans to Mallya’s Kingfisher Airlines, some of them bearing the billionaire tycoon’s personal guarantee, you’d think a few of these playthings might be about to change hands. Well, maybe just a few,” observes the FT.
Mallya has a prodigious car collection, several super yachts as well as teams in IPL Cricket and F1. Some assets are more easily converted into cash than others, however, with F1 teams notoriously difficult to sell. The FT notes that the creditor banks are only expecting to recover 30% of the debt.
Mallya sold a chunk of his United Spirits business for $1.2 billion at the end of last year, but has not used the money to service the debt on the airline. His unwillingness to invest his own money in saving the airline appears to have been what made the banks act in the last 24 hours.
As for the impact of Mallya’s troubled business life on the Force India F1 team, deputy team principal Bob Fernley told me at the team’s launch two weeks ago that the team is ringfenced from the turbulence of Mallya’s other activities,
“It doesn’t affect the F1 team. There is a disconnect between what happens in Vijay’s business and what Vijay is doing on the F1 team. So it doesn’t matter what happens there. The shares in United Spirits have quadrupled in the last few months, so he did a wonderful deal there.
“But whether Kingfisher or United Spirits is doing well or not doesn’t affect the team. And it’s very difficult for us to get that message across, although we have been trying for several years.
“We get a story every three or four months where we are about to go bankrupt, or someone is selling us or whatever and we’ve had that for five years, so we are used to it,” he added. “Five times a year we are up for sale! But we are still there and the strength of Force India, which so many people seem to have missed, is our shareholders. We don’t have to go to the external market to be able to raise our race budgets.
“We are blessed to have quality shareholders like Vijay and Sahara.”
Force India is the only team which has not yet named its second driver ahead of the new season starting in one month. They are due to do so before next week’s second F1 test in Barcelona, with Jules Bianchi the front runner. However Autosport reported today that Adrian Sutil had a seat fitting at the team’s Silverstone base ahead of a possible test outing next week.