Cash-strapped Deccan Chronicle Holdings (DCHL) will not be able to keep alive the Deccan Chargers, an Indian Premier League franchise, after the Bombay High Court on Thursday upheld the Indian cricket board?s decision to terminate the franchise. The news comes as a blow to the consortium of lenders to the company, which would have benefitted from a sale of the franchise that reportedly commands a price of about R1,000 crore.
Bankers are scheduled to meet on October 19 to figure out how the firm can be given easier repayment terms. This is the second time banks will meet under the auspices of the corporate debt restructuring (CDR) cell to review DCHL?s case. The consortium of 21 lenders to the debt-ridden media company, with a total exposure of R4,100 crore, failed to reach a consensus on admitting DCHL into the CDR cell when they met late last month. Some of the bankers are awaiting the forensic audit of accounts by Canara Bank before taking a final call on DCHL’s CDR proposal.
Tata Capital in September this year dragged DCHL to the Bombay High Court seeking to recover R100 crore in dues. ICICI Bank has the largest exposure at R490 crore, followed by Axis Bank at R400 crore and Canara Bank at R330 crore. Other exposures include those of Andhra Bank at R200 crore, YES Bank at R175 crore, IndusInd Bank at R100 crore, Kotak Mahindra Bank at R100 crore, Indian Overseas Bank at R100 crore and Corporation Bank at R100 crore. Some non-banking lenders include Tata Capital which has lent R100 crore, Religare Enterprises, whose exposure is R150 crore, Future Capital which has lent R150 crore, SBI Pension Fund with an exposure of R50 crore and IFCI from which the company borrowed R27 crore.
Earlier, on October 12, a court-appointed arbitrator justice CK Thakkar had passed an order granting status quo till October 17 on the Board of Control for Cricket in India (BCCI) decision to terminate the Deccan Chargers team. This came after the high court refused to give an extension to DCHL for providing a R100-crore bank guarantee and keep the franchise alive in the lucrative cricket league.
Following the status quo order by justice Thakkar, the BCCI moved the high court on October 13 with an appeal filed under Section 37 of the Arbitration and Conciliation Act. Justice RD Dhanuka stayed the order of the arbitrator, following which BCCI floated the tender for a new IPL franchise.
On Thursday, the Bombay HC quashed the status quo on the termination of the Deccan Chargers franchise. ?An arbitrator cannot overrule an order passed by the court,? the Bombay High Court said.
?BCCI moved an appeal against the order of arbitrator and the same was heard today morning,? the cricket board said in a statement. ?The Bombay High Court was pleased to stay the order of arbitrator after hearing both the parties.?
?Thus, the termination of the Deccan Chargers franchise stands,? the statement added. The battle between BCCI and Deccan Chargers took an ugly turn on September 15, when the cricket board terminated the team following an emergency IPL governing council meeting in Chennai.
The decision came after DCHL rejected a R900 crore bid by PVP Ventures, a Hyderabad-based company engaged in urban infrastructure and financing movies, to buy Deccan Chargers on September 13. DCHL challenged the termination in the Bombay High Court.
On October 1, the court asked DCHL to give the R 100 crore bank guarantee. The judge hearing the case had also observed that the BCCI acted in haste to terminate the franchise.
The court appointed an arbitrator to resolve the dispute between BCCI and DCHL within three months. The court also asked BCCI not to act on the termination of the franchise agreement for seven days, but if DCHL failed to provide the bank guarantee, then the license to play in the IPL would be cancelled.
On October 12, the day DCHL was to furnish the bank guarantee, the company announced that Deccan Chargers will be sold to Mumbai-based real estate firm Kamla Landmarc for R1,000 crore. The sale, though, is unlikely to go through if the franchise gets terminated.
However, later that evening, the franchise was terminated having failed to provide the bank guarantee. The court-appointed arbitrator justice Thakkar gave DCHL an extension by ordering a status quo on the termination. This order of the arbitrator was quashed by the Bombay High Court on Thursday.
