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United Breweries, Diageo to move SC on share sale

business Updated: Jan 09, 2014 01:01 IST
HT Correspondent
HT Correspondent
Hindustan Times
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Vijay Mallya-led United Breweries Holdings Ltd (UBHL) and Diageo will appeal in the Supreme Court against the Karnataka high court order of annulling the latter’s acquisition of shares in UBHL-controlled United Spirits Limited (USL).

The high court observed in its order that a possible diversion of Rs 4,000 crore from the deal was bound to have an impact on UBHL and its general creditors. Creditors, including BNP Paribas, had filed a winding-up petition against UBHL, the holding company of Vijay Mallya’s companies.

A UBHL spokesperson said allegations made by the BNP Paribas in the high court are “baseless and untenable”. “UBHL admittedly is not a party to the transaction involving Rs 4,000 crore. It was a legitimate remittance made through normal banking channels by USL to its subsidiary to repay a loan taken from Citibank for the acquisition of Whyte & Mackay,” he said.

The court had ruled that these explanations were unacceptable and needed further investigation.

“As for the transaction relating to Watson, once again UBHL admittedly is not a party to the transaction. However, a loan has been legitimately advanced by StanChart to Watson on the strength of its creditworthiness. In respect of this loan, a backstop guarantee (that is, should the need ever arise) has been issued by Diageo in favour of StanChart - all legitimate transactions carried out after appropriate disclosure,” the UBHL spokesperson said in the company’s response.