Deccan Chronicle Holdings Ltd. seeking truce with IFCI

With the sword of Damocles that is IFCI’s winding-up petition in the Andhra Pradesh high court hanging over its neck, the fund-strapped Deccan Chronicle Holdings Ltd (DCHL) is working out a compromise arrangement with the financial institution (FI).

DCHL owes about Rs25 crore to IFCI. The FI had advanced the funds to DCHL in 2011 through subscription to 250 non-convertible debentures (NCDs) sold through IDBI. The NCDs were to mature on June 26, 2012 and carried a coupon of 11.25%.

With the media house not coming forward to repay the the redemption amount of Rs27.80 crore, IFCI had approached the high court seeking the appointment of an official liquidator to wind up the company and ensure that the funds are repaid.

However, sources said, DCHL has already repaid about Rs10 crore and is working out a compromise formula in order to stop the legal process from proceeding further.

“DCHL is coming up with a proposal to repay the balance Rs15 crore in four instalments spread over four months – October, November, December and January. There is still no formalisation of the compromise. But, there is negotiation going on to this effect,” a source dealing with the litigation between IFCI and DCHL said.

IFCI claimed that TV Reddy, chairman of DCHL, had later submitted an undertaking seeking to clear the dues by July 4, 2012.

Accordingly, DCHL had arranged Rs2.8 crore electronically towards interest, in addition to two ICICI Bank cheques for the principal amount. However, one cheque was dishonoured due to “insufficient funds” in the DCHL account.

When IFCI petitioned the court, other lenders of DCHL asked it to withdraw the winding-up petition to work out a method that would help the other lenders too. However, IFCI refused, thus making it clear it intends to keep the petition active till the last instalment is paid out in January 2013.