Deccan seeks truce with irate 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 T Venkatram 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, including banks, asked it to withdraw the winding-up petition in order to work out a method that would help other lenders too to recollect their monies. However, IFCI refused, thus making it clear that it intends to keep the petition active till the last instalment is actually paid out in January 2013. “Moreover, in the absence of any written commitment from the DCHL management so far, there cannot be any withdrawal,” the source said.

Meanwhile, the alleged systemic failure in DCHL is likely to come under the scanner of the Serious Frauds Investigation Office (SFIO). It is learnt that the SFIO is keen on taking a preliminary look at the books of accounts of DCHL in order to ascertain if there had been any misuse of funds.

This was necessitated by apprehensions over the way the media company borrowed Rs5,000 crore in a short time and yet slipped into a liquidity crisis.