The fate of Deccan Chargers hangs in balance as banks are not keen to surrender their right on the revenues of the Indian Premier League (IPL) cricket team.
The Board of Control for Cricket in India (BCCI) has already made it clear that promoters cannot mortgage their IPL team for borrowing money from banks for their other businesses.
Bankers argued the current rules did not prevent them from having a right on revenues earned by Deccan Chargers through sponsorship and ticket sales. “Our bank does not have a mortgage or pledge on the Deccan Chronicle Holdings’ (DCHL) IPL franchise... The bank has a perfected sole first charge over the receivables of Deccan Chargers as well as significant fixed asset properties as collateral,” said a banker.
Senior officials at BCCI, however, told Business Standard even this was not permissible.
According to sources, while Deccan Chronicle has borrowed over Rs 3,200 crore from 28 lenders, only two private sector banks and one financial services firm had the right on Deccan Chargers’ revenues as collateral against their loans.
BCCI also warned it would not hesitate to terminate Deccan Chargers if promoter DCHL failed to release payment to the players and clear its financial mess before the end of this month. “We have already informed them and if they fail we may opt for an auction by terminating their contract,” said a BCCI official.
Bankers said they would demand a share of the proceeds if the Deccan Chargers team was sold.
“We will want a portion of the sale proceeds to protect our interest. We will, of course, take BCCI’s consent. But lenders’ interest has to be protected,” said a senior official with one of the private banks that has right on Deccan Chargers’ revenues. He added the team’s valuation was likely to be in the range of Rs 600-700 crore.
Deccan Chargers’ owners have been looking to sell their stake for the past two years but are yet to find a buyer. Recently, Religare Capital was appointed to structure a deal. The team’s sponsors include Emirates, Jaypee Cement, TVS, Puma and Coca-Cola. DCHL did not comment.
