Deccan Chargers finds buyer but fails to give BCCI bank guarantee to secure deal

MUMBAI: The financially-distressed owners of IPL franchise Deccan Chargers on Friday failed to provide a bank guarantee to BCCI as directed by the Bombay High Court causing the IPL team‘s termination to continue. The dispute over the termination of the IPL franchise will now be adjudicated by an arbitrator appointed by the court.

Deccan Chronicle Holdings Ltd (DCHL) has, however, found a new buyer for Deccan Chargers in Mumbai-based Kamla Landmarc Real Estate Holdings Private Limited. But it will have to wait for the arbitration proceedings to begin before it can rest easy on its chance of completing its agreement with the real estate developer to sell the Hyderabad-based IPL team. DCHL did not disclose the price at which it has agreed to sell the IPl team to Kamala Landmarc, but reports estimated it to be around Rs 10 billion.

DCHL failed to provide the Rs 1 billion bank guarantee to BCCI (Board of Control for Cricket in India) even after the court granted three additional days on its request, ending the possibility of its team‘s participation in the sixth season of IPL in 2013.

Justice S J Kathawala declined to extend the deadline for furnishing the bank guarantee for the second time saying that it had earlier accommodated DCHL by extending the deadline by three days.

The High Court had on 1 October ruled that the BCCI had acted in haste by terminating the franchise agreement of Deccan Chargers while directing the franchise to furnish an irrevocable and unconditional bank guarantee of Rs 1 billion within 10 days. The court had clarified that the order will cease to be in effect after DCHL fails to furnish the bank guarantee.

Deccan Chargers would have been allowed to participate in the season 6 of the IPL and renew contracts with players had they managed to submit bank guarantee. All the franchises are expected to renew contracts with players before 31 October.

The court has appointed retired Supreme Court judge C K Thakkar as the sole arbitrator to adjudicate in the dispute between BCCI and DCHL. It had directed that the two parties must complete arbitration within three months.

Earlier in the day, DCHL had announced that it has agreed to sell its IPL franchise to Kamala Landmarc. DCHL informed the bourses that its board, which met on Thursday, has resolved to "sell, transfer/dispose of the Deccan Chargers Franchise business undertakings/business division of the company to Kamla Landmarc Real Estate Holdings Private Limited".

The BCCI had on 14 September terminated the franchise agreement of Deccan Chargers after DCHL rejected PVP Ventures lone bid of Rs 9 billion despite the bidder meeting the eligibility criteria of the BCCI. DCHL had rejected the bid by PVP Ventures, also a real estate firm, over payment terms.

PVP Ventures had bid after DCHL under the aegis of the cricket board invited tenders for purchase of the Hyderabad franchise in order to ease its financial difficulties. The sale of Deccan Chargers is critical for DCHL to cut down its debt which is estimated to be in the range of Rs 42 billion.