Mumbai: Deccan Chronicle Holdings Ltd (DCHL), backed by its lenders, sought a reprieve for the Deccan Chargers Indian Premier League (IPL) franchise, which was terminated after the company failed to furnish a Rs.100 crore bank guarantee on 12 October.
DCHL told the Bombay high court Wednesday it was ready to furnish a bank guarantee for the amount and sought relief against the termination. Its lenders also moved the court in support of the DCHL appeal for interim relief against termination of the franchise.
The court adjourned the hearing until Thursday, when it will pronounce its order.
The high court had rejected DCHL’s plea for a further extension to furnish the bank guarantee on Friday. It had ordered the company to submit the bank guarantee by 5pm on that day, failing which the decision by the Board of Control for Cricket in India (BCCI) terminating the team would stand. The company failed to meet the deadline.
The IPL’s governing council met Wednesday to discuss the Deccan Chargers termination. BCCI’s Ratnakar Shetty, when contacted, refused to divulge details of the meeting held today. “It is not for media consumption,” he said.
Debt-ridden DCHL said Friday it had found a buyer for the team in Kamla Landmarc Real Estate Holdings Pvt. Ltd in a stock exchange filing. The Hyderabad-based Deccan Chronicle informed BSE that its board of directors was authorized in a meeting on 11 October to sell the cricket franchise to Kamla Landmarc. The resolution had been passed subject to shareholder and other approvals, it said.
BCCI said DCHL did not inform it about the deal with Kamla Landmarc and, therefore, the sale was in breach of the contract. BCCI, which said its written permission was required for the transfer of the franchise, said there was no buyer for Deccan Chargers as of Wednesday. Any potential buyer would need to follow all the processes prescribed by BCCI, it said.
DCHL said that the company had sought BCCI’s approval for the Kamla Landmarc deal on 11 October and also submitted a copy of the deal’s memorandum of understanding (MoU) to the administrator.
The lenders told the court on Wednesday that DCHL owes around Rs.2,000 crore to them. The corporate debt restructuring (CDR) proposal of DCHL seeks to address a default of Rs.4,000 crore, Janak Dwarkadas, senior counsel representing Ratnakar Bank, told the high court. The DCHL-Kamla Landmarc transaction is pegged at Rs.1,250 crore, he said. Kamla Landmarc’s lawyer Navroz Sirwai said the termination of the franchise would be detrimental to DCHL, its lenders and the team’s players. The real estate company said that it would clear BCCI’s dues by 31 March, in time for season 6 of IPL.
DCHL said BCCI owes it Rs.14 crore by way of “central revenue” rights and that it invested Rs.600 crore when it acquired the franchise. It has given Rs.237 crore to BCCI towards the franchise in the last five years, the company said. DCHL said termination would lead to serious losses and it would default in discharging liabilities to banks.
DCHL said the company that’s taking over Deccan Chargers had a sound financial position with a turnover of Rs.1,000 crore when the court asked how BCCI’s interests would be protected.
DCHL said once it furnishes a bank guarantee, the arbitrator should decide the matter.
BCCI said the franchise agreement overrides the lenders’ plea against termination and that Hyderabad could get a new team after the first three seasons of the tournament. The cricket board said that according to the franchise agreement, BCCI is entitled to increase teams after the fourth year of IPL, hence it’s within its rights to call for fresh bids for a franchise.
The sport administrator said there were seven winding-up petitions filed against DCHL in Hyderabad even before DCHL had approached the Bombay high court. The cricket board said DCHL did not inform the court about the winding-up petitions filed against them. DCHL’s contract was terminated because IFCI had filed a winding up against the company and it had failed to resolve this, BCCI said.
According to the franchise agreement, a team can be terminated if a bona fide case of insolvency has been filed against its owners, the board said.
According to the deal between DCHL and Kamla Landmarc, the real estate company has agreed to a cash payout of Rs350 crore over 10 years starting 30 December.
BCCI said J.P. Duminy, a South African player of the Deccan Chargers team, filed a complaint with the cricket body alleging that DCHL had withdrawn a payment made to him. DCHL denied this, and said the money paid to Duminy was still in his account.
DCHL had moved the Bombay high court on 15 September challenging BCCI’s decision to terminate the Hyderabad franchise from IPL.
BCCI made its decision after DCHL, earlier in the month, rejected the only bid it received of Rs.900 crore from PVP Ventures Ltd, a real estate firm, stating the payment terms were not to its liking.
The publisher of English newspaper Deccan Chronicle, business paper Financial Chronicle, Asian Age and Telugu daily Andhra Bhoomi has been struggling with about Rs.4,000 crore debt on its books. The products of HT Media Ltd, Mint’s publisher, compete with those of DCHL in some markets.