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Banks propose SPV for Deccan Chargers

Source : BUSINESS_STANDARD
Last Updated: Sat, Sep 15, 2012 18:50 hrs

A proposal by a group of banks to form a special purpose vehicle (SPV) to run the Deccan Chargers cricket team was submitted to the Board of Control For Cricket In India (BCCI) working committee today, though no outcome has been announced so far.

N Srinivasan, president of BCCI, the national cricket governing body, said he would not comment on the issue as it was under the consideration of the Bombay High Court. He, however, said reports that BCCI’s decision to terminate Deccan Chargers contract was stayed by the Bombay High Court were incorrect. “As we said in a statement earlier, there is no stay issued by the High Court today."

BCCI, in an emergency meeting of the Indian Premier League (IPL) governing council held on Friday evening, decided to terminate the Deccan Chargers contract on the ground that the team owned by the debt-ridden Deccan Chronicle Holdings Ltd (DCHL) had breached contract.

BCCI received a legal notice from Deccan Chargers, which said the franchise stating had not committed any breaches and BCCI should not act to terminate the franchise as YES Bank Ltd had came forward to finance to remedy the issues.

Sources close to the development said a group of 32 banks had proposed BCCI that they were ready to form an SPV to take charge of the team. However, a BCCI source said: "We have never seen such a thing and don’t know how it would work. What is the guarantee whether it will work?"

The board might float a fresh tender for a new team from of the waiting franchise cities, or it may go with the original eight team format. It may be noted that the IPL started with eight-teams model and added two more teams — Pune and Kochi — later. However, the Kochi team was terminated later.

Earlier in the day, BCCI came out with a statement, saying the Mumbai High Court had heard the counsels of both the board and DCHL on the termination issue. The matter has been placed for hearing on Monday, said the release, quoting Sanjay Jagdale, secretary of BCCI.

On Thursday, BCCI conducted an auction in the presence of a supervisor from the high court in which PVP Ventures, a film producing and real estate firm, came up with a bid for Rs 900 crore.

The bid was reportedly rejected by Deccan Chargers, following which the board took the decision to terminate the team contract.

"The BCCI is completely justified in this action which was taken with careful deliberation and only due to the absolute inability of the franchise to effectively run the team," the BCCI said in a statement.

The future of the 2009 IPL champions, who were skippered by Sri Lankan captain Kumar Sangakkara, looked like being preserved when they were put up for sale last week by cash-strapped Deccan Chronicle Holdings, who had paid $107 million to have the franchise for 10 years in 2008.

Interest had been lodged in buying the side but the BCCI said that Deccan Chronicle Holdings had rejected a bid of Rs 4.5 billion and an equal sum in convertible debentures.

This coupled with a letter from the franchise owners' lawyers saying they had done nothing wrong led to the BCCI to shut down the team, which also featured South African quick Dale Steyn, Australian batsman Cameron White and Indian bowler Ishant Sharma.

"BCCI received a lawyers notice invoking arbitration from the franchise stating that it had not committed any breaches and even if such breaches were committed, the BCCI should not act to terminate the franchise till Yes Bank Ltd furnishes sufficient finance to cure the breaches," the BCCI said.

"By this, Deccan Chronicle Holdings Ltd has clearly admitted its inability to cure its breaches within the time stipulated in the BCCI notice despite every bit of assistance from the BCCI.

"Since the month of May, BCCI has received repeated assurances that the overdue player fees would be paid; all of these promises have been unfulfilled."

Deccan are not the first side to be thrown out of the lucrative IPL.

Last year, the board terminated the contract of the Kochi franchise for payment default.

Deccan's demise is another hiccup for the IPL, which began to massive fanfare in 2008, dazzling fans and attracting prominent investors like Reliance Industries chief Mukesh Ambani, India's richest man, as well as spirits and airline magnate Vijay Mallya and Bollywood actor Shah Rukh Khan.

However, a series of scandals has tarnished the league's image.

The BCCI sacked IPL Chairman Lalit Modi in 2010 following corruption charges and viewers' fatigue has prompted a dip in TV ratings as the league's diminishing sheen continues.

Last month, DLF, India's largest real estate firm, terminated the title sponsorship of the league ending a five-year association.




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