MUMBAI: The financially-distressed Deccan Chronicle Holdings Limited (DCHL), the owner of Twenty20 cricket IPL franchise Deccan Chargers, got a relief on Monday as the Bombay High Court barred the Board of Control for Cricket in India (BCCI) from inviting tenders for a new team till it hears DCHL‘s petition on Monday, 24 September.

DCHL has challenged the decision of BCCI to terminate the IPL governing council‘s franchise agreement for Deccan Chargers team.

The hearing was postponed to Monday as the Deccan Chargers‘ counsel asked for more time to go through the affidavit filed by BCCI and prepare for the hearing. While granting Deccan Chargers‘ plea, the high court also asked BCCI to refrain from issuing a tender for a new franchise till 24 September.

Earlier, there was speculation in sections of the media that the BCCI has zeroed in on 10 potential cities for the new franchise and has fixed the base price at Rs 3 billion. The BCCI had on Friday terminated Deccan Chargers‘ contract. It was to decide on inviting tenders for a new team on Saturday.

DCHL, under the aegis of BCCI, had called for bids to sell its IPL team but received only one bid from PVP Ventures, a Chennai-based listed real estate and film financing company. The bid was rejected by DCHL saying the price quoted by the bidder was not good enough and the payment terms unacceptable. PVP Ventures had offered to pay Rs 450 crore upfront and another Rs 450 crore through convertible debentures.

BCCI had found PVP Ventures to be an eligible entity to own an IPL franchise and was unhappy at DCHL‘s decision to reject the bid. The bid was conducted in the presence of a court officer appointed by the high court as an observer.

BCCI secretary Sanjay Jagdale, in a statement, had said the bid was rejected despite the bidder meeting the eligibility criteria of the BCCI.

The BCCI said it had to take the extreme step of terminating the Deccan Chargers agreement as the franchise owner was in breach of the agreement and had failed to pay players‘ fees despite repeated assurances since May.

DCHL is burdened by crippling indebtedness (various estimates have put its borrowings at around Rs 4,000 crore) and is in dire need of funds to ward off any action by its lenders. The promoters have already pledged their shares in DCHL and also the trademarks of its newspaper brands - Deccan Chronicle, Financial Chronicle, Asian Age and Andhra Bhoomi -- to lenders.

MUMBAI: Deccan Chronicle Holdings Limited (DCHL), having a debt weight of Rs 32 billion, can heave a sigh of relief as it found an interested party in Videocon Industries soon after it issued a tender notice inviting prospective buyers to bid for its IPL team.

The sale of the team at the right price holds the key to DCHL?s rescue plan as it desperately seeks investors to protect its core media business from sinking. The company is believed to have borrowed from 28 lenders including Yes Bank, and has mortgaged its other assets including its printing presses.

However, it?s amptly clear by now that DCHL will not get the kind of valuation that it was earlier looking for. The company, which publishes a clutch of newspapers including Deccan Chronicle and Financial Chronicle, was seeking Rs 15 billion from the sale of Deccan Chargers, the Hyderabad IPL team.

After gauging market sentiment, the company has climbed down from its demand and would be able to find a buyer willing to pay in the range of Rs 6.5-8 billion. Many believe Rs 6.5-7 billion would be an attractive valuation for the Hyderabad team.

Venugopal Dhoot, the CMD of conglomerate Videocon Industries, told Indiantelevision.com that a price tag in that range was "reasonable".

"We are interested in buying the franchise. Our bid could be in the range of Rs 7 billion," he added.

However, Videocon is not the only interested party. Some of the names doing the rounds include that of Ahmedabad-based Adani Group, Anil Ambani-promoted ADA Group and Chennai-based media house Sun Group(not listed entity).

Indiantelevision.com could not independently confirm whether Adani, Reliance ADAG and Sun are actually interested in Deccan Chargers. Gautam Adani, chairman of Adani Group, and Sun Group promoter Kalanithi Maran, could not be reached. Earlier, DCHL had denied a media report which had stated that the company was close to striking a deal with Sun Group.

Incidentally, Videocon, Adani and Reliance had at some point expressed interest in owning an IPL team.

DCHL had early Thursday issued a tender inviting bids to purchase the Hyderbad IPL team under the aegis of BCCI.

As per the tender notice, bidders would be required to enter into a new franchise 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 will acquire from Deccan Chronicle Holdings on an "as is where is" basis which means that the new buyer will have to use the name Deccan Chargers and will have to clear the liabilities of the current owner.

The valuation climbdown

Kings XI Punjab co-owner Mohit Burman opines that anyone wanting to enter the IPL should pay a maximum of $200 million for a franchise as he believes that anything above will make the venture unsustainable.

"I am sure that the owners of the Deccan Chargers would love to get the price that the BCCI got when Sahara bought a franchise ($374 million for the Pune franchise). But had the business model been sustainable at such high price levels, then Kochi would not have folded," avers Burman.

Part of the family that owns Dabur, Burman adds: "The initial franchise buyers have managed to make profits. So a price of a price of around $125 million (Rs 6.5 billion) is reasonable. But to make profits after paying over $200 million could be difficult. Of course you could have a scene where someone enters the IPL for reasons other than wanting to make a profit. Then the price could be anything."

In 2008, DCHL paid $107 million for Deccan Chargers, making it the third costliest team among the first lot of franchise buyers. Billionaire Mukesh Ambani topped with $111.9 million for the Mumbai franchise, followed by Vijay Mallya?s $111.6 million for the Bangalore team.

Agrees Brand Finance India managing director M Unnikrishnan, "I think a value of Rs 6.5 billion is fair enough for a team like Deccan

 Chargers considering the fact that it falls on all three key parameters: engaging fans and monetising that fan base; lack of consistent performance on the field; and governance process."

The climbdown in Deccan Chargers valuation doesn?t surprise Unnikrishnan since that has been the trend with the IPL mother brand, which has seen its brand value plummet from a high of $4.13 billion in 2010 to $2.92 billion this year.

"The fate of the franchises and the mother brand (IPL) are interlinked. The brand valuation of IPL has been declining and it has reached 2009 levels when the valuation was at $2 billion," he adds.

Unnikrishnan, though, feels there is a hidden value in Deccan Chargers that any prospective buyer would like to exploit in the long run. "An investor has the scope to get its (Deccan Chargers) true value in future by fixing the weak areas," he says.

MUMBAI: Deccan Chronicle Holdings Ltd (DCHL), which owns the IPL franchise Deccan Charges and a clutch of newspapers, is in financial trouble. While the Industrial Finance Corporation of India (IFCI) has filed a winding-up petition against the company in the Andhra Pradesh High Court, the promoters have further pledged another 14.5 per cent of their shares to Religare Finvest.

IFCI has contended that DCHL‘s liabilities may lead to the erosion of the entire net worth of the company and make it commercially unviable and insolvent.

The public financial institution said it was worried about Deccan Chronicle‘s financial health and sought the winding up of the company to recover its dues.

The petition was filed by IFCI on Friday after DCHL defaulted on redemption of 250 unsecured redeemable non-convertible debentures (NCDs). The company defaulted on dues worth Rs 278.4 million.

In 2011, the IFCI had invested about Rs 250 million through 250 NCDs in Deccan Chronicle, which were to mature on 26 June this year and carried a coupon of 11.25 per cent.

A few days back, DCHL promoters had pledged 54 per cent stake in the company to Future Capital.

In a disclosure to the bourses on Monday, Religare Finvest said that a little more than 30.2 million shares of DCHL "have been pledged/available in collateral given by the various clients as a security to secure the loan against securities facility".

The promoter holding in DCHL at the end of June 2012 was 73.83 per cent with T Venkaram Reddy, T Vinayak Ravi Reddy and P K Iyer owning 24.61 per cent stake each, according to information on the National Stock Exchange.

Mumbai: The promoters of Deccan Chronicle Holdings Ltd (DCHL), Hyderabad-based publisher of newspapers and owner of Indian Premier League (IPL) team Deccan Chargers, have pledged 54 per cent stake to Future Capital Holdings Ltd.

The promoter holding in DCHL at the end of June 2012 was 73.83 per cent with T Venkaram Reddy, T Vinayak Ravi Reddy and P K Iyet owning 24.61 per cent stake each, according to information on the National Stock Exchange.

In a filing to the stock exchanges, Future Capital Holdings said over 112.8 million shares (or 54 per cent) of DCHL have been pledged by the promoters as part of collateral for funds borrowed by DCHL and a company named, Aviotech Private Ltd. The amounts of borrowings by DCHL from Future Capital were not disclosed.

DCHL‘s annual report for 2011-12 is not available. According to the company‘s 2010-11 annual report, DCHL had loans of Rs 3.13 billion but also had cash and bank balances of Rs 7.03 billion as on March 31, 2011.

DCHL shares fell 19 per cent on the Bombay Stock Exchange to close at Rs 18.55 per share on the pledging of a substantial portion of the promoter shareholding. DCHL‘s share price has fallen from a high of Rs 73.50 per share as on July 29, 2011.

The market value of the 54 per cent of the shares pledged works out to Rs 2.43 billion.

DCHL is the publisher Deccan Chronicle, a leading English newspaper in South India with a circulation of over 1.45 million copies per day across Andhra Pradesh, Tamil Nadu, Karnataka and Kerala. DCHL also publishes ‘Asian Age‘, an English daily newspaper in Mumbai, Delhi, Kolkata, and London, a financial English daily ‘Financial Chronicle‘ from Delhi, Mumbai, Hyderabad, Bangalore and Chennai and a Telugu Daily, weekly, monthly, all titled ‘Andhra Bhoomi‘ in Andhra Pradesh. DCHL also owns a chain of 50 retail stores of lifestyle products, including books, music, stationery, gifts, toys, pens, and eye ware.