Mumbai: A lenders’ consortium has agreed to finance cash-strapped newspaper publisher Deccan Chronicle Holdings Ltd (DCHL) so that its team, Deccan Chargers , can play in next year’s edition of the Indian Premier League (IPL), offering a potential lifeline to the Hyderabad franchise.
The offer by the consortium, comprising Yes Bank Ltd, Axis Bank Ltd, IDBI Bank Ltd, IDFC Ltd, Ratnakar Bank, SREI Infrastructure Finance Ltd and Religare Finvest Ltd, was spelled out in an affidavit filed by the Board of Control for Cricket in India (BCCI) in the Bombay high court on 17 September.
The affidavit, a copy of which was reviewed by Mint, also mentions that Videocon Industries Ltd, a business group with interests ranging from electronics to energy, is willing to buy the Hyderabad team for around Rs.250 crore. Videocon had expressed interest in bidding for Deccan Chargers in last week’s auction but stayed away.
In a communication to BCCI, dated 14 September, the lenders said they had “agreed among themselves to bear the costs and expenses of IPL season 6 of the Deccan Chargers franchise...(and) are prepared to enter into a binding commitment to provide financial support for IPL season 6 (scheduled in 2013)”, the affidavit said.
The lenders, who expressed their willingness to offer a bank guarantee to the effect, said they “will continue to solicit interest from potential buyers for the proposed transfer of the Deccan Chargers franchise”.
If an arrangement is put in place so that Deccan Chargers can play in the next season of IPL, it would be a lease of life for the franchise after its failed auction last week.
Yes Bank, IDBI Bank, Ratnakar Bank, IDFC and Religare Finvest declined to comment on grounds that the matter was before the courts. “We are not aware about the developments related to Deccan Chargers,” an SREI Infrastructure Finance spokesperson said in an email response to questions from Mint. An email sent to Axis Bank went unanswered.
The affidavit was filed by BCCI in court after DCHL, which won the Hyderabad franchise with a bid of $107 million for 10 years in 2008, challenged its decision to terminate Deccan Chargers after the publisher spurned the lone bid—a Rs.900 crore offer from real estate firm PVP Ventures Ltd—in the auction of the team on 13 September.
DCHL said the payment terms weren’t acceptable to it. The bid comprised Rs.450 core in cash and an equal amount in convertible debentures.
The BCCI affidavit said Venugopal Dhoot-controlled Videocon Industries, in a 14 September letter to Zarin Daruwala, head of wholesale banking at ICICI Bank Ltd, had expressed interest in acquiring Deccan Charges and sought 15 days to form a consortium to run the IPL team. The letter was forwarded to BCCI for consideration by the bank.
“We would like to mention that our total bid amount is likely be in the vicinity of Rs.250 crore inclusive of any payments on account of past player dues and any other payments to be made to BCCI,” said the letter signed by Dhoot and appended to the affidavit. An email sent to ICICI Bank was not answered.
A person close to the development, who spoke on condition of anonymity, confirmed the firm’s interest in acquiring Deccan Chargers through a consortium including Videocon. A Videocon spokesperson, however, declined to comment on the issue.
Deccan Chargers chief operating officer E. Venkat Reddy couldn’t be reached for comment. His mobile phone was switched off. Dhoot said in an interview earlier this month that he was willing to stump up as much as Rs.700 crore, but did not even buy the tender document for the auction. According to two people familiar with the development, the stakeholders were expecting potential bids to be in the range of Rs.650-750 crore at the time of the auction.
Given the paucity of time, we were unable to be a part of the auction under the tender process floated by DCHL. We are aware (the) said auction was not successful,” Dhoot said in his letter to ICICI Bank.
On Monday, the Bombay high court directed BCCI not to invite bids for another auction of Deccan Charges until the final hearing of DCHL’s case on 24 September. IPL chairman Rajeev Shukla said the board had considered calling for new bids. “We have to look at the smooth functioning of the league. There are several concerns when it comes to the DCHL-owned team,” Shukla said.
The failed auction of Deccan Chargers was part of DCHL’s attempts to dispose of assets not central to its core media business to raise money and pay debt that a court document said was “over Rs.4,000 crore” and a senior civil servant last week estimated at Rs.5,000 crore. Analysts have blamed ventures in unrelated businesses—including aviation, a book store chain and the cricket franchise—for the company’s financial woes.
On 15 September, Yes Bank issued 45 demand drafts to clear outstanding dues amounting to Rs.33 crore to Deccan Chargers players, support staff and cricket boards and associations. A day later, Yes Bank executives, in a conference call with BCCI treasurer Ajay Shirke, asked the board not to encash the drafts until it releases the money due to Deccan Chargers under the central revenues generated from IPL, according to an attachment to the affidavit.
The amount due to Deccan Chargers is around Rs.41 crore.
“The payment due has been cleared through demand drafts issued. Our objective of doing this was to try and contribute in protecting the interests of the franchise and every stakeholder involved (lenders included) so that everyone gains,” said a Yes Bank executive with direct knowledge of the development.
DCHL publishes the English-language newspapers Deccan Chronicle, Financial Chronicle, The Asian Age and Telugu daily Andhra Bhoomi. HT Media Ltd, publisher of Mint and Hindustan Times, competes with DCHL in some markets.
Shares of DCHL lost 4.92% to close at Rs.9.85 on Tuesday on BSE while the benchmark Sensex lost 0.25% to close at 18,496.01 points. Since the beginning of the year, DCHL shares have lost 72.9% while the Sensex gained 19.68%.