 "Diageo shows Mallya who is boss at United Spirits: Raises default issue, curbs his powers")
The going is getting tough for Vijay Mallya, the owner of grounded Kingfisher Airlines who is resisting lenders’ attempts to slap a wilful defaulter tag on him.
UK drinks major Diageo has curbed Mallya’spowers in United Spirits (USL), where he was re-elected as a non-executive director and chairman. Mallya had sold the company to Diageo last year in a multi-structured deal, in a desperate bid to raise funds money to pare his debt.
Following a reduction in its shareholding in USL, United Breweries (Holdings) Ltd (UBHL), promoted by Mallya, is no longer entitled to recommend an independent director to the USL board, global spirits major Diageo said in a statement.
“The composition of the USL board following the annual general meeting reflects this change,” it said.
Apart from this, the UK major has also raised the issue of Mallya’s defaulter tag.
“Diageo’s contractual obligations to support Mallya continuing as non-executive director and chairman of USL are subject to these conditions as well as the absence of certain defaults by UBHL or Mallya,” the statement said.
Mallya remains UBHL’s nominated director and therefore, in accordance with the terms of the Shareholders Agreement, Diageo voted in favour of the resolution at the USL AGM to re-appoint Mallya as a director of USL, it said.
At the AGM of USL held yesterday in Bangalore, Diageo said shareholders of USL approved appointments of CEO Anand Kripalu as a director and Sudhakar Rao, D Sivanandhan and Indu Shahani as independent non-executive directors apart from Mallya’s re-appointment.
Diageo said other members of USL board – Paul Walsh (non-executive director nominated by Diageo), Ravi Rajagopal (non-executive director nominated by Diageo) and P A Murali (CFO and Diageo-nominated director) – would continue in their respective positions.
UBHL remains entitled under the shareholders agreement to nominate one director to the USL board subject to it continuing to hold at least 1,307,950 shares in USL and Mallya continuing to control UBHL, it said.
Diageo is the majority shareholder in USL with 54.78 per cent interest and continues to be entitled under the shareholders’ agreement to appoint its nominees to the roles of CEO and CFO of USL, as well as to nominate and recommend directors to the USL board, subject to overall composition of the USL board meeting the applicable requirements of Indian law and regulation, the spirits major said.
The world’s largest spirits maker Diageo Plc had on 9 November, 2012 announced that it would acquire 53.4 per cent stake in United Spirits for Rs 11,166.5 crore in a multi-structured deal.
With inputs from PTI
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