Brewer's board not so united

A BOARDROOM battle has erupted at the ironically named United Breweries, which has been negotiating financial restructuring since it breached banking covenants in April.

At a board meeting on Thursday to approve the latest proposals, the acting chairman Graham Axford dramatically produced a rival scheme. The chairman, Vijay Mallya, was in India and was forced to agree to let the Axford plan be evaluated by the company's adviser, Guinness Mahon.

Later Mr Mallya said: 'If United Breweries can be resuscitated into the vehicle we thought it was, it will continue to have our support. In the meantime, I am talking to my lawyers about taking action against the original directors of the company.'

Mr Mallya's family controls United Breweries India (UBI), one of India's biggest brewing and distilling groups. He is believed to be exploring whether his company invested on the basis of misinformation.

His rescue plan was to ring- fence the existing British United Breweries, which owns 76 public houses but is swamped by debt. Some of that debt would be written off and the rest converted into equity, giving the banks 100 per cent.

On top of that, a new company would be created to own the Kingfisher beer name in this country and handle its distribution for UBI. This operation would retain the group's share quote. A new chief executive would be brought in from a leading drinks group.

The proposal delivered by Mr Axford, a former managing director of corporate finance at stockbrokers James Capel, would try to revive the British United Breweries' existing pubs business. It would involve an injection by another public company and would almost certainly lead to the departure of UBI and Mr Mallya.

Mr Axford was not available for comment yesterday.