Promoters of Hyderabad-based Deccan Chronicle Holdings Ltd (DCHL) have pledged 54 per cent of the company’s shares to Future Capital Holdings, as part of collateral against the company’s borrowings.
Though DCHL did not disclose the amount borrowed, based on the market price yesterday, when the shares were pledged, it is estimated at about Rs 260 crore. The promoters have pledged a total of 112.85 million shares.
On Friday, the company’s shares plunged 19 per cent on the BSE to Rs 18.55, compared with yesterday’s close of Rs 22.90. Earlier, the shares had hit a monthly high of Rs 33.40 and a 52-week high of Rs 73.50.
Promoters hold a stake of 73.83 per cent in DCHL, which owns the Deccan Chronicle English daily and the Andhra Bhoomi Telugu daily. DCHL also owns the Deccan Chargers Indian Premier League (IPL) cricket team, as well as the Odyssey chain of retail stores.
The company’s promoters — T Venkattram Reddy, T Vinayak Ravi Reddy and P K Iyer — each pledged 37.6 million shares to Future Capital. Before this, they held 24.61per cent stake each (51.4 million shares each) in the company. Financial institutions and banks hold 6.98 per cent stake in DCHL, while retail shareholders account for 10 per cent. The stake of other companies stands at 7.32 per cent.
All efforts to seek comments from the management failed. DCHL vice-chairman and promoter P K Iyer did not respond to phone calls and text messages.
Last week, N Krishnan had resigned as managing director of the company, ostensibly due to personal reasons. The company’s management had said his resignation had been accepted.
DCHL, which had raised Rs 175 crore through a public issue in December 2004, is reportedly facing financial problems. Early this month, credit rating agency CARE Ratings had downgraded the company, stating it had defaulted on its debt obligations.
In an indication of the company’s acute financial distress, the DCHL management had reportedly put on the table its IPL franchise Deccan Chargers. This came at a time when the price was not expected to draw many, owing to the team’s poor performances in recent IPL editions. In 2008, DCHL had bought the franchise for $107 million.
DCHL has stated multiple parties have evinced interest in acquiring a stake in its IPL team. It had mandated Religare Capital Markets to advise on the suitability of offers. However, the company told bourses the move was exploratory, not conclusive.
In the second week this month, a British court had awarded about £10 million to the company’s former chief executive Tim Wright, who had initiated legal proceedings against DCHL in January 2009, after his abrupt removal. He had argued the company had violated a contract that had a severance package of about £10 million.
The Odyssey retail chain is also said to be going through difficult times and the company has cut the number of its stores across the country from 89 to six.