Friday, January 10, 2014

Diageo joins Mallya in disagreeing with High Court order

BS Antonita Madonna  |  Bangalore  
 Last Updated at 17:09 IST

Diageo has made known its strong disagreement with the order of the Karnataka High Court,  joining Vijay Mallya who this week has asked for a redressal of certain facts in the judgment.

The order passed by a division bench consisting of Justice N Kumar and Justice Rathnakala on December 20 annulled the sale of UB Holdings stake in United Spirits Ltd to Diageo in a transaction worth about Rs 1460 crore for over 10 million shares.

"Having reviewed the detail of the Appeal Court judgment, Diageo is of the view that the decision was wrong in law and based on erroneous facts," the company said in a statement.

Diageo said it believes that its purchase of United Spirits' shares from UB Holdings  is "genuine and bona fide",notwithstanding the pronouncements of the Appeal Court.

Creditors to UB Holdings, fighting for dues of close to Rs 600 crore and corporate gurantees for loans to Kingfisher Airlines worth over Rs 6000 crore, alleged that the UB Holdings has not only entered into the transaction without their consent but also at a less profitable rate. Besides, the transaction was entered into at a time when 5 winding up petitions  were filed against UB Holdings for nonpayment of the dues.

In response, Diageo said, "the acquisition price of Rs 1,440 per share paid to UBHL for the USL shares is fair and reasonable.  Diageo intends to appeal the decision and will also consider what other options are open to it to pursue in order to defend its position."

Regarding Whyte and Mackay :-

Diageo has also taken offence to allegations made in Court regarding a "parallel transaction" in which Rs 4000 crore had been allegedly moved out of India to a tax haven for the Whyte and Mackay acquisition by United spirits in 2007.

"That transaction for the acquisition of Whyte & Mackay significantly pre-dates the events which are the subject of the current legal proceedings and has nothing whatsoever to do with Diageo’s transaction to acquire an interest in USL agreed on 9 November 2012," the company said in a statement.

Further defending United Spirits in which it owns a 26.37%t stake and eventually aims to own a majority, Diageo said it "understands that all remittances by United Spirits were done through normal banking channels, following receipt of all requisite approvals from the Reserve Bank of India."

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