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BCCI gives Kochi 30 days; shareholder feud escalates

BCCI gives Kochi 30 days; shareholder feud escalates
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First Published: Thu, Oct 28 2010. 12 17 AM IST
Updated: Thu, Oct 28 2010. 12 17 AM IST
New Delhi/Mumbai: The governing council of the popular Indian Premier League (IPL) gave its beleaguered Kochi franchise 30 days to resolve a dispute between two groups of shareholders, but with one of them sticking to its position till late Wednesday evening and even hinting at legal recourse, a resolution seems unlikely.
Failure to arrive at a settlement will mean a termination of the franchise on the 31st day, said Shashank Manohar, president of the Board of Control for Cricket in India (BCCI), and the head of the governing council.
At the worst, “BCCI will (issue a new) tender for the eighth franchise”, said Ratnakar Shetty, chief administrative officer of BCCI. He added that it was not right for the media to presume that the Kochi consortium would not meet the deadline. “Why don’t you wait and watch first?” he said.
The Kochi franchise was one of two new ones inducted in IPL after an auction in April. The other is the Pune franchise owned by the Sahara group. Since then, IPL’s governing council has cancelled two other franchises, Rajasthan Royals and Kings XI Punjab, for alleged irregularities regarding changes in ownership. If the Kochi franchise stays in the league, the fourth edition of IPL, scheduled for mid-2011, will have eight teams like the previous editions did.
A settlement between the two shareholder groups in the Kochi franchise seemed unlikely on Wednesday with the representative of one group, comprising five of the six investors in the franchise, claiming that legal options were being explored against the sixth investor, Rendezvous Sports World Pvt. Ltd led by the Gaikwads, for breach of trust.
“There is no compromise whatsoever with Gaikwads. We stand by our decision that if Gaikwads want to accept what we have agreed on (in) the MoU (memorandum of understanding), which was signed by all the investors, then it is fine. But we don’t want to deal with Gaikwads in future by them having anywhere close to 25% stake,” added this person, who did not want to be identified.
However, Rendezvous chief executive officer (CEO) Satyajit Gaikwad struck a conciliatory note and said the two sides would try to resolve the matter “amicably”.
The Gaikwads of Rendezvous Sports were instrumental in getting the other five investors together and kept 26% of the ownership—including 25% as sweat equity—for themselves. They had also issued 40% of their sweat equity to Sunanda Pushkar, then girlfriend and now wife of former minister of state for external affairs Shashi Tharoor.
The disclosure of this and subsequent allegations forced Tharoor to resign; caused Pushkar to relinquish her equity; and, indirectly, set off events that resulted in the firing of IPL commissioner Lalit Modi and the expulsion of the two teams.
Following this, the other five investors in the Kochi franchise initially wanted the Gaikwads out, but subsequently diluted their demand and said they would go ahead if the latter reduced their stake to 10%. An MoU to this effect was signed by the Gaikwads and the investors, and submitted to BCCI on 20 October. Subsequently, however, the Gaikwads communicated to BCCI that they did not accept the terms laid down in the MoU.
“We will take them to court. The MoU submitted to BCCI on 20 October was signed by all investors. Shailendra Gaikwad was the one who signed on behalf of Rendezvous. There are witnesses to that MoU. By denouncing the MoU after signing it, Rendezvous has committed breach of trust and will be answerable in the court,” said the representative of the other five investors.
“We signed that document in blind faith and (it) was meant for internal use. However, the investors converted the document to MoU. It is a purported document,” countered Satyajit Gaikwad. He also made a fresh proposal under which Rendezvous would pay for 12.5% of the equity and get another 12.5% free as sweat equity. “We will never use the legal language with our partners, even if the negotiations collapse; we propose that all investors give up their ego and come together keeping the team in mind,” he added.
The other five investors in the Kochi franchise are Anchor group, Parniee Developers, Filmwaves, Anand Shyam and Vivek Venugopal. A person familiar with the thinking of the five investors said on Wednesday that they would “issue a public statement (later) today or tomorrow maintaining that Satyajit Gaikwad does not represent the consortium and his views should not be taken as consortium’s views”.
Gaikwad, who has been presenting himself as the CEO and spokesman of the franchise, said that the “unincorporated joint venture agreement clearly states that the rights to appoint chief executive officer of franchise rests with Rendezvous. And Rendezvous in its wisdom has appointed me as their CEO”.
Meanwhile, Rajasthan Royals on Wednesday filed a petition in the Bombay high court challenging BCCI’s decision to cancel its franchise. The court will hear the matter on Friday.
appu.s@livemint.com
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First Published: Thu, Oct 28 2010. 12 17 AM IST