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Mumbai:
The financial crisis of Deccan Chronicle Holdings Ltd (DCHL),
the publisher of newspapers and owner of Indian Premier League
(IPL) team Deccan Chargers, is becoming a sticky proposal
for those who have taken exposure to it.
Future
Capital Holdings (FCH), which is waiting to to have a new
owner, gets rid of DCHL. The promoters of FCH, a financial
services listed entity, have taken over the entire loan extended
by the company to DCHL.
In
a notice to the Bombay Stock Exchange, FCH said its promoter
group has agreed to take over the entire Rs 1.70 billion loan
exposure to DCHL at book value. FCH said with the assignment
of the loan to its promoter group, FCH will cease to have
any exposure to DCHL group.
FCH
further said its promoter group "intends to take all
action necessary to safeguard all its entitlements and rights
after this (loan) assignment."
The
complexity of the issue is evident as FCH will be coming under
Warburg Pincus. The US-based private equity firm has agreed
to acquire the entire 53.67 per cent promoter stake in FCH
from retailer Kishore Biyani’s Future Value Retail Ltd
and Pantaloon Retail (India) Ltd.
DCHL
promoters have pledged 54 per cent of their stake to FCH as
part of collateral for funds borrowed by DCHL and a company
named, Aviotech Private Ltd. If they fail to pay up, the pledged
shares would go to FCH. However, under Warburg Pincus ownership,
FCH can't hold the majority stake in DCHL as news organisations
in India are not allowed to have more than 26 per cent of
foreign equity.
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