Mallya Will Have to Give Up Some Rights to Ac­cess Di­a­geo Money

Will have to forgo USL chair­man’s perks; cos re­lated to him can’t make any fu­ture claims on USL

The Economic Times - - Companies -

Kala Vi­jayragha­van &

Baiju Kalesh

Mum­bai: Vi­jay Mallya can’t ac­cess the $40 mil­lion (about .₹ 260 crore) that British spir­its maker Di­a­geo paid and is ly­ing in an es­crow ac­count un­til he dons the hat of a com­mon share­holder of United Spir­its and sheds perks that came with the com­pany’s chair­man­ship. Un­der the terms of the deal for Mallya to step down, com­pa­nies re­lated to him can’t make any fu­ture claims on United Spir­its, said two peo­ple in the know.

“He has to give up cer­tain rights and priv­i­leges in­clud­ing busi­ness class travel ex­penses,” said one of them. “He is like another share­holder own­ing shares of the com­pany.”

The $40 mil­lion is the first in­stal­ment of $75 mil­lion that Di­a­geo ear­lier this year agreed to pay Mallya for step­ping down from a com­pany that he made In­dia’s largest spir­its maker af­ter in­her­it­ing from fa­ther Vi­tal Mallya. The next pay­ment is due in 2017. De­tails of the deal aren’t pub­licly avail­able.

Di­a­geo ex­ec­u­tives said they didn’t have any up­date on the of­fer made apart from what was dis­closed pub­licly. Mallya didn’t re­spond un­til press time on Thurs­day to an email seek­ing com­ment.

“There were sev­eral con­trac­tual agree­ments be­tween Mallya and

Di­a­geo not in pub­lic do­main yet,” the sec­ond per­son said. “Mallya is not on the board of the com­pany, but has a mi­nor­ity 4% stake and ear­lier as chair­man had ac­cess to a num­ber of Di­a­geo-owned con­ve­niences that have to be given up.”

The next in­stall­ment of the pay- ment is some­time away, but that de­pends on whether mar­ket reg­u­la­tor Se­cu­ri­ties and Ex­change Board of In­dia (Sebi) comes in way or not, he added. Sebi had raised ques­tions over Di­a­geo agree­ing to pay Mallya $75 mil­lion and sought clar­i­fi­ca­tion on the set­tle­ment.

Mi­nor­ity share­hold­ers of United Spir­its also ques­tioned the deal. They are un­happy be­cause they say they were not com­pen­sated while Di­a­geo agreed to pay Mallya over and above the money paid ini­tially to pur­chase a con­trol­ling stake from him.

“Di­a­geo will be forced to in­clude the mi­nor­ity share­hold­ers of USL into the to­tal con­sid­er­a­tion made,” said Anil Singhvi, founder di­rec­tor of proxy ad­vi­sory firm In­sti­tu­tional In­vestor Ad­vi­sory Ser­vices (IIAS).

“Di­a­geo goofed up on the of­fer made to Vi­jay Mallya, ab­solv­ing him of so many ir­reg­u­lar­i­ties but did not bother to take note of USL share­hold­ers. They may have to re­work the of­fer to make another open of­fer to pub­lic share­hold­ers of United Spir­its,” he added.

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