Banks may be forced to write off about three-fourths of their Rs 4,000-crore loans to media company Deccan Chronicle Holdings due to skimpy collateral, and slow progress in the investigation into possible fraud due.
About two-dozen lenders, including Canara Bank, Axis Bank, ICICI Bank, Corporation Bank and Yes Bank are wrangling over what could be recovered from the once-sprawling media group that has fallen on bad times.
“Even if we are able to recover funds from the sale of Deccan Chargers, the recovery could be just about Rs 1,000 crore,” said a banker who lent money to the company but did not want to be identified. “This is also on the assumption that we are able to sell the cricket franchise.”
Lenders are in a fix as the main business of the company may be losing value fast and an early sale of its Indian Premier League cricket franchise Deccan Chargers looks unlikely as the Board of Control for Cricket in India and potential buyers have set stiff conditions.
A decision on admitting the company into the corporate debt restructuring cell may also get delayed since the headless Canara Bank, the lead bank, is unable to proceed with the forensic investigation into the company. The bank’s chairman and managing director, S Raman, retired last month and the government is yet to appoint a successor.
“The forensic audit is expected to take a month as the Canara Bank chairman and managing director has retired. The appointment of the new head is still pending,” a senior public sector bank official in the know of the development said not wanting to be named. The CDR cell will discuss the matter in its meeting on October 19, said a person familiar with the developments.
Canara Bank has lent Rs 330 crore to Deccan Chronicle Holdings and ICICI Bank has lent Rs 490 crore. Both have classified the loans as bad loans. Canara Bank officials did not comment and ICICI Bank did not respond to an email query.
Recently, the Bombay High Court asked Deccan Chronicle to give an irrevocable and unconditional bank guarantee of Rs 100 crore to the Board of Control for Cricket in India on or before October 9.
The bank guarantee would be in force for one year, said Justice SJ Kathawala, who heard a petition filed by DCHL challenging the BCCI’s decision to terminate the contract of Deccan Chargers franchise. The court, on September 26, had appointed retired Supreme Court judge CK Thakkar as arbitrator to resolve the dispute between BCCI and DCHL.
Source – Economic Times