The company has been in the middle of an ownership battle between Deepak Fertilizers and Kolkata-based Adventz group — the latter known to be a Mallya supporter. Both Deepak Fertilisers and Adventz & Mallya combined now hold significant amount of shares in the company, with the earlier promoter UB group almost reduced to a minority shareholder.
Adventz had an agreement with Mallya that the UB group supremo would remain MCF chairman for the next few years. Analysts say Mallya’s quitting the MCF board could be a deal between Poddar and Mallya so that the company can attract bank funds in future. As Mallya had given personal bank guarantees for his now collapsed airline Kingfisher, many banks are not giving any loans to Mallya related entities. Mallya owes close to Rs 7,000 crore to Indian banks.
Reacting to the news, the MCF shares shot up by 15 per cent but later shed some gains and were trading at ~88.50 apiece, eight per cent higher than their previous close on BSE.
Under a deal signed in May this year, UB Group Chairman Mallya was to have a considerable say in the management of MCF, even if Saroj Poddar’s Adventz group gained control of the company after a bidding war with Deepak Fertilizers. Mallya was to be chairman for five years, could appoint three directors on the board of MCF and have a right of first refusal on Poddar’s shares. Adventz could appoint only one director, according to its filings with stock exchanges at the time of its counter-offer to Deepak Fertilizer’s open offer, in May.
At present, the UB group is not in a position to finance the competing offer and Adventz is willing to finance the competing offer and participate in the management of MCF. Accordingly, Adventz and UB have launched a competing offer and entered into the agreement that said Mallya would continue to be the chairman for at least five years from the date of completion of the competing offer.