27th Apr 2015 06:28
LONDON (Alliance News) - Drinks giant Diageo PLC Monday confirmed that it is considering its options as Indian drinks company United Spirits Ltd moved to oust its chairman and former majority shareholder amid an internal probe into its financial statements.
Diageo noted a statement by USL, in which it holds a 54.78% majority stake, saying that the board had lost confidence in Vijay Mallya and had called on him to resign. Mallya had indicated he wouldn't tender his resignation, said USL, which had said it would ask shareholders to vote him out if he refused to step down.
"As previously announced by Diageo, it has certain contractual obligations to support Dr Mallya continuing as non-executive director and chairman of USL subject to certain conditions and in the absence of certain defaults," Diageo said in a statement.
"USL has provided its inquiry report and all related materials to Diageo. Diageo notes the recommendation of the USL board and will now consider its position under its agreements with Dr Mallya and United Breweries (Holdings) Ltd in light of the inquiry report and materials provided to it," it added.
Diageo signed a shareholders agreement when it bought its initial 25.02% stake in USL in July 2013, and that gave pledges to support Mallya as a non-executive director and chairman of the Indian drinks company.
The Financial Times reported over the weekend that USL's probe found improprieties in financial transactions between United Spirits and Kingfisher Airlines, the now-collapsed Indian carrier also owned by Mallya, between 2010 and 2012. Mallya described the conclusions of the investigation as based on "half truths and twisted facts", the FT said.
By Steve McGrath; [email protected]; @stevemcgrath1
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