Initiative Applies Longstanding Rum Cover Over Program as Congress Intended to Help the US Virgin Islands Reach Economic Stability and Fiscal Autonomy

NORWALK, Conn., July 1 /PRNewswire-FirstCall/ -- Diageo, the world's leading spirits, beer and wine company is setting the record straight in light of a Bloomberg story that erroneously stated that Diageo received funds from the Troubled Assets Recovery Program (TARP). Diageo has never sought, and will not receive TARP funds.

The suggestion by Bloomberg that Diageo is receiving TARP funds is false ('Bailout of U.S. Banks Gives British Rum a $2.7 Billion Benefit... The $2.7 billion Diageo tax break in the October bailout bill gives the most financial aid to a non-U.S. company,' Bloomberg, June 26, 2009). The public-private initiative that is bringing Captain Morgan to St. Croix is based on cover over, not TARP. Cover over has been the law of the land for more than a half century and the rum cover over extender (which increases cover over from $10.50/gallon to $13.50/gallon) has been reenacted every year by Congress as part of an independent package of tax extenders. Congress has enacted the cover over extender based upon its finding that the US Virgin Islands (USVI) has a continuing need for cover over revenues to promote its economic stability and fiscal autonomy.

Purely as a matter of circumstance, Congress attached the extenders package to the TARP bill last fall. It is clear that the cover over is completely unrelated in any way to either the bailout or TARP money. The suggestion in the Bloomberg article that Diageo somehow benefits from TARP funds is misleading and gives the reader an inaccurate and false impression. Diageo's agreement with the USVI was announced in June 2008 -- well before any TARP legislation was ever discussed on Capitol Hill. Even if this extender had never been introduced or passed, Diageo's agreement with the USVI would still be in tact.

The following overview describes the public-private initiative between the Government of the USVI and Diageo that will build a state-of-the-art distillery in St. Croix to supply rum for the Captain Morgan brand in the US for at least thirty years.

OVERVIEW

Last summer, the USVI and Diageo announced a public-private initiative under which Diageo will construct and operate a state-of-the-art, environmentally sound, high-capacity rum distillation facility in St.