Companies

Diageo asks Mallya to return $40 m

PTI London/New Delhi | Updated on January 11, 2018 Published on July 27, 2017

MALLYA-MEDIA   -  Reuters

British liquor giant Diageo today said it has asked beleaguered businessman Vijay Mallya to return $40 million paid to him as part of the $75-million (₹515 crore) sweetheart deal for his exit from United Spirits Ltd.

Diageo has stopped payment of $7 million a year to Mallya as part of the deal and sought compensation for the losses incurred by it.

The British firm had agreed to pay Mallya $75 million over five years as global non-compete and non-interference fee post his exit from United Spirits Ltd (USL).

Citing violation of the agreement by Mallya, Diageo has also ruled out the future instalments to him, saying “it was not liable to pay such amount”.

“Diageo and other group companies have demanded from Mallya the repayment of $40 million which was paid by Diageo on February 25, 2016, and also sought compensation from him for various losses incurred by the relevant members of the Diageo group on account of the breaches committed by him,” Diageo said in its preliminary results for the year ended June 30, 2017.

Diageo has paid $40 million of the total $75 million on signing of the agreement on February 25, 2016, while the balance $35 million was to be paid in equal instalments of $7 million a year over five years.

This was subject to and conditional on Mallya’s compliance, with certain terms of the agreement, it added.

“While the first instalment of $7 million would have become due on February 25, 2017, owing to various reasons, including breaches of several provisions of the 25 February Agreement committed by Mallya, Diageo believes that it was not liable to pay such amount, and is very unlikely to become liable to pay future instalments, to Mallya,” said Diageo.

Published on July 27, 2017
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