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Boby Kurian

Bangalore , Aug. 4

THE UB group Chairman, Mr Vijay Mallya, confirmed an impending settlement with Mr Kishore Chhabria to buy out the latter's shareholding in Herbertsons Ltd.

Mr Mallya is scheduled to meet Mr Chhabria in Mumbai on Tuesday in a bid to end the legal proceedings pertaining to the control over the company.

Speaking to Business Line, Mr Mallya said the lawyers representing both the sides - Mr Fali S. Nariman for Mr Mallya and Mr Kapil Sibal for Mr Chhabria - had clinched an agreement sometime ago whereby he would acquire the entire shares of Mr Chhabria.

"Yes, I will be meeting Mr Chhabria and try to put an end to the legal proceedings," he said.

The agreement between the two parties was reached before last Friday's Securities Appellate Tribunal (SAT) order that regularised Mr Chhabria's 43 per cent stake and directed him to make an open offer for further 20 per cent.

When contacted, Mr Kishore Chhabria said he was not aware of any agreement and refused to comment further.

Replying to a query whether SAT order would change the contours of the impending agreement, Mr Mallya said "a lot of emphasis was being laid on interim events" and claimed the basic structure of the deal would remain the same. As per the arrangement, Mr Chhabria will sell his stake to Mr Mallya at a mutually acceptable price and walk out with the subsidiary company, BDA Ltd. It is learnt that Mr Mallya spoke to Mr Chhabria in the wake of the latest order and this paved the way for a meeting. Earlier, while talking to Business Line in the wake of the SAT order, Mr Chhabria maintained that he hoped for a cordial end to the dispute through out-of-court settlement.

Mr Mallya desisted from putting a final value to the deal but said it might be structured with an enterprise value of Rs 100 crore in mind. Informed sources said the nitty-gritty of the complicated deal was still being ironed out. However, industry observers tracking the development said Mr Chhabria could come up with a final bargain, especially after SAT order, and accede to the deal after "seeing the colour of the money".

It is not yet clear how Mr Mallya and UB will fund the transaction. Sources said a financial institution would be involved as mentioned by this newspaper some months ago.

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