Bangalore: The Karnataka high court order annulling Diageo's acquisition of shares in India's largest distiller United Spirits Ltd from Vijay Mallya's UB Holdings Ltd (UBHL) landed the British drinks giant in a tight spot two weeks ago. But a detailed order — publicly available now — may prove to be more embarrassing for Diageo, which is listed on the London and New York stock exchanges.
The division bench order said the deal-making was not bona fide since UBHL was facing allegations of fund diversions to tax havens, while questioning Diageo's loan guarantees to an offshore Mallya entity, which owned F-1 team Force India.
The court said the structuring of the deal adversely impacted UBHL's creditors and the right of the purchaser (Diageo) would be decided by the winding-up petitions filed by them. The 173-page verdict has opened a pandora's box for both Mallya and Diageo after the high court bench accepted and heard a clutch of winding-up petitions filed against UBHL, a parent of Mallya's diversified empire, and also a significant stakeholder in the grounded Kingfisher Airlines Ltd (KFA).
Read news in full 08/01/14 Anshul Dhamija & Boby Kurian/Times of India
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