Sole bid for Deccan Chargers
rejected; BCCI likely to allow more time to DCHL
Insearchindia.com
Team
(UPDATED 13
September 2012 11:43 pm)
(13 September 2012 4:24 pm)
MUMBAI: Deccan Chronicle Holdings Ltd (DCHL) rejected the
sole offer it received at the Thursday’s bidding for sale of its IPL franchise
Deccan Chargers, raising a major question mark over how the
financially-distressed company can master its debt crisis.
The ailing Hyderabad-based media company, however, can gasp
for breath till the BCCI takes the hard decision of terminating its IPL
contract with DCHL. The BCCI is likely to allow DCHL more time to find a buyer
for the Indian Premier League (IPL) T20 cricket franchisee, a source familiar
with the development said.
PVP Ventures, a film production company, had put in a bid of
Rs 9 billion for purchase of Deccan Chargers but the franchisee owner refused
to accept it saying the offer to pay the price in installments was not
acceptable.
The bidding was conducted under the auspices of the BCCI,
the owner of IPL, but only PVP Ventures submitted its bid. Videocon Industries
CMD Venugopal Dhoot and a little known R.N. Sports Club had expressed their
interest in buying Deccan Chargers but appear to have decided against bidding
for the IPL team at the last moment. Dhoot had told Indiantelevision.com that
his bid could be around Rs 7 billion.
The BCCI in a statement said the bid that was received by
Deccan Chronicle met its eligibility and suitability criteria. "The bid
was then reviewed by Deccan Chronicle Holdings Limited which, in its discretion
and with no role being played by BCCI, rejected the bid on the basis of the
payment terms offered by the bidder."
BCCI President N Srinivasan told reporters after the bidding
process, "We found that they (PVP Ventures) were acceptable. However, the
owners of Deccan Chargers rejected the bid."
According to industry sources, Deccan Chronicle’s decision
to reject the payment terms was prompted by lender banks, which wanted the
prospective buyer to pay the entire purchase consideration upfront. The banks,
which met in Mumbai on Wednesday to considering easing the terms for repayment
of loans granted to Deccan Chronicle, had deferred any decision till the next
meeting on 26 September.
The BCCI’s working committee is meeting on 15 September to
decide on Deccan Chargers. The BCCI is unlikely to resort to any hasty action
that includes cancellation of the franchisee licence of Deccan Chronicle and is
instead expected to decide on giving more time to Deccan Chronicle to sell the
IPL team, according to a source.
Deccan Chronicle Holdings, which has a profitable publishing
business with newspaper brands such as Deccan Chronicle and Financial
Chronicle, is in a financial mess having amassed huge debt (unconfirmed reports
put the total debt at closer to Rs 40 billion) and is in dire need of funds to
pacify angry lenders.
The rejection of the sole bid at a decent price came as a
shock as a price of around Rs 7 billion, including assumption of any
liabilities, was considered to be a fair valuation.
The price of Deccan Chronicle shares fell after the news
that the company has rejected the sole bid broke at around 3 pm, after being
higher than Wednesday’s closing price for most of the day on hopes of fund flow
from sale of the IPL team. The company’s shares closed at Rs 10.84, down 1.72
per cent from Wednesday’s close and almost 80 per cent down from its 52-week
high.
Deccan Chronicle had last week issued a tender inviting bids
for buying the Hyderbad IPL team, under the aegis of BCCI. As per the tender
notice, bidders were required to enter into a new franchisee agreement with
BCCI. The purchase consideration would be paid into a bank account as decided
by the lending banks, with 5 per cent payable directly to the BCCI.
The winning bidder would have acquire Deccan Chargers on an
"as is where is" basis, which means that the new buyer had to use the
name Deccan Chargers and also clear any liabilities.
