Nimbus Communications in talks with bankers to restructure debt
4 min read 21 Oct 2013, 12:30 AM ISTThe sports broadcaster is considering options including a rights issue, partial sale of TV and sports library assets
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Mumbai: Sports broadcaster Nimbus Communications Ltd, which operates Neo Sports television channel, is in discussions with its bankers to restructure debt.
Nimbus is considering several options as part of the restructuring process, said Neeraj Gupta, chief financial officer. “The company is considering options including a rights issue, preferential issue, shareholder loans or convertibles, debt rollover or refinancing, re-structuring, partial sale of its TV and sports library assets and others. Specialist advisers are being consulted and a decision will be taken in a month or two," Gupta said. The firm’s library assets exceed 5,000 hours of programming
A final decision has not been taken regarding referring the company to the corporate debt restructuring or CDR cell, a forum for lenders in India to negotiate and recast stressed loans, Gupta said.
Nimbus’s chairman and managing director Harish Thawani had stepped down in August. Three other directors have also resigned in 2013, according to document accessed by Mint from the registrar of companies (RoC).
Thawani, however, will continue to serve as the executive chairman of Neo Sports Broadcast Pvt. Ltd, a unit of Nimbus.
Nimbus has not announced its earnings since the fiscal year ended March 2012. In the previous fiscal, its loss stood at ₹ 49 crore compared with a net profit of ₹ 19 lakh in the year earlier. Its borrowings stood at ₹ 352 crore at the end of fiscal 2011, marginally up from ₹ 344 crore a year ago, according to the annual report submitted with the RoC.
Gupta said that company’s debt, excluding loans taken from shareholders, stands at ₹ 140 crore and it has ₹ 200 crore worth of deposits kept with banks. He, however, did not specify how much loan it has taken from its shareholders.
The sports broadcaster has also been delaying its annual general meetings (AGM) for the last two years.
“The company is facing problems in extracting accounts due to crash of hard disk; the data recovery may take some time, due to which it may not be possible to hold AGM on or before 30 September," Nimbus informed RoC on 8 August. The firm has sought a three-month extension for conducting its AGM on 31 December.
In 2012 as well, the company did not conduct its AGM, stating technical problems in data extraction.
The documents reviewed by Mint showed that the company has been taking term loans from banks to correct its “cash-flow mismatches". The list of banks that have exposure to the firm includes Indian Overseas Bank, Punjab National Bank, Union Bank of India, Lakshmi Vilas Bank, Oriental Bank of Commerce and Indian Bank.
The RoC document reveals that Nimbus has been seeking restructuring of debt from individual banks.
For instance, Lakshmi Vilas Bank has agreed to restructure ₹ 61.3 crore loan through rescheduling of debt re-payment period. The bank has also asked the promoters of Nimbus to infuse ₹ 20 lakh as part of their contribution towards the restructuring package.
The firm has kept its term deposits and broadcasting rights as collateral with the lenders.
In July 2011, Nimbus had also pledged the receivables coming from its production agreement with Board of Control for Cricket in India (BCCI) but in December 2011, BCCI cancelled its ₹ 2,000 crore media rights agreement with Nimbus stating that the firm defaulted on payment. Under the agreement, Nimbus was to pay BCCI for broadcasting the matches.
After scrapping the contract, BCCI sought to encash the bank guarantees given by Nimbus to secure payment dues. The banks, however, refused to pay the money to BCCI.
Bank guarantee refers to the assurance that a bank provides on behalf of the borrower that he will meet the debt obligations.
Since then, the cricketing body and Nimbus along with three nationalized banks—Punjab National Bank, Indian Bank and Union Bank of India —have been fighting a legal battle. The Supreme Court in April asked the banks to deposit ₹ 400 crore with the BCCI till a final decision is taken on the issue. If BCCI loses, it will have to return the entire money along with interest, the court order had said.
Separately, Nimbus and BCCI are also seeking to resolve their dispute through arbitration.
The ongoing dispute with BCCI has prevented Nimbus from repaying its debts, said Gupta. “Nimbus would have retired all debt earlier this year or even last year, was it not for a peculiar situation which is that these funds will likely become available to Nimbus only after its arbitration with BCCI is over."
Thawani resigned from his post on 25 August along with his wife Shobha Thawani who was serving as one of the directors. Two other directors—Ranjan Kapoor and Supratim Basu—have also resigned.
For now, the co-founder of Nimbus, Akash Khurana, who was earlier vice-chairman, has taken over as the chairman.
“As part of business reorganization, the two co-founders of Nimbus—Akash Khurana and Harish Thawani decided that Nimbus and its largest subsidiary Neo Sports Broadcast Pvt. Ltd needed separate focuses and more stringent arm’s length relationship," Gupta said. An official from one of the banks said that stepping down from chairmanship and directorship will not solve the problem. “The promoters cannot get away easily as their personal guarantees are attached. They are shareholders as well." The official declined to be named.
A Union Bank official said that the bank is in talks with the company to resolve the matter. “There were some clauses for bank guarantee which Nimbus says it has fulfilled but banks are saying that they have not fulfilled the requirements," he said, declining to be identified.
Nimbus had plans to raise at least ₹ 344 crore through an initial public offer in 2010 but due to a volatile market the company allowed its approval from Securities and Exchange Board of India (Sebi) to lapse in March 2012.
Anup Roy contributed to this story.
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