Srei wants to convert debt into equity
DECCAN CHRONICLE DEBT WOES
Media firm's board authorises discussion with lender on proposed step; also okays preferential issue of equity for prospective investors
BS REPORTER
Hyderabad, 17 January
Hyderabad- based media company Deccan Chronicle Holdings Ltd (DCHL) on Friday said it had got a notice from Srei Infrastructure for conversion of a part of the latter's loan dues into equity.
In a filing to the BSE, the DCHL management also said its board of directors at a meeting on Thursday constituted and authorised asub- committee to begin discussion with Srei in this regard.
The move to seek conversion of a part of the debt dues into equity comes after an earlier statement of the Kolkata- based Srei group on having initiated legal steps to recover a ₹ 220- crore loan to DCHL. The notice did not specify how much of the total loan would be converted into equity.
"We have called upon DCHL to convert such value of the part outstanding amount ( due under the loan agreement), into such number of fully paid- up, voting equity shares of DCHL, so that at any time, the said converted shares shall be at least 24 per cent of the total expanded paid- up equity share capital of the company," Srei stated.
The firm said to protect its rights and considering the fact that DCHL was a listed company, the company felt it was fair to explore another option for part recovery of the loan. " As a PFI ( public financial institution), we had already approached the DRT ( Debt Recovery Tribunal) for recovery of our dues," Srei said, adding DCHL was yet to allot shares.
According to the Securities and Exchange Board of India ( Sebi), instruments allotted on a preferential basis to any person, including promoters or the promoter group, shall be locked in for a year from the date of allotment, except for those made on a preferential basis which involves swaps of equity shares or securities convertible into equity shares at a later date for acquisition.
DCHL's market capitalisation is ₹ 78 crore, or a third of the loan amount due to Srei alone. In any case, not more than 20 per cent of the total capital of the company, including capital brought in by way of a preferential issue, would be subject to a lock- in of three years from the date of allotment, according to Sebi norms.
The media company had been dragged to various legal fora in a multitude of loan default cases filed by its lenders after it became clear the company was sitting on at least ₹ 4,000 crore of debt early last year.
Going beyond the Srei notice, the DCHL filing said the board had constituted and authorised the board committee to consider and approve an issue and allotment of equity shares on a preferential allotment basis to prospective investors and to take steps, subject to necessary approvals. The DCHL shares touched the upper circuit by rising 17p to ₹ 3.74 each on the BSE on Friday, as the statement raised hopes on the companys future.
The DCHL management is also facing an ongoing investigation by the Central Bureau of Investigation for the alleged irregularities in the manner these loans were taken and spent. Canara Bank maintained a forensic audit of the DCHL books did not reflect the full picture of the debt, beside alleging the company management had given falsified documents to lenders.
DCHL's market capitalisation is ₹ 78 crore or a third of the loan amount due to Srei alone
| Swedes near their store rollout in single- brand retail |
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New Delhi, 17 January Even as India's multi- brand retail policy is facing challenges following the Delhi government's reversal in stand, Swedish single- brand chains Ikea and H& M are firming their store rollout plans in the country. Ikea's ₹ 10,500- crore investment proposal has been the biggest in the sector, followed by H& M's ₹ 700 crore. Both had to face several rounds of government questioning before getting approval. It is learnt fashion chain H& M, which competes with brands such as Spain's Zara in Europe, will open its first store on 25,000 sq ft in New Delhi's Select City Mall in March or April. The company did not respond to the Business Standard's queries on store openings. Three stores are being planned in the country for 2014, a source said without revealing the locations. Though H& M may have wanted to go faster in store expansion, the sector is usually cautious while investing during an election year, said experts. H& M's investment is likely to go much beyond ₹ 700 crore. According to its proposal, it wants to run 50 stores in India. Furniture chain Ikea, whose was the first big- ticket global proposal in single- brand retail, is believed to have finalised Noida, next to Delhi, as the destination for its first India store. A spokesperson said: " We have not yet decided where the first store will be built." However, a source said the store in Noida was expected to be built and opened by 2016. The source added the world's largest furniture group was expected to open its second store also in the national capital region. Gurgaon, next to Delhi, is named as the likely choice for the next store. Ikea has maintained all through it was ready to wait for the right location and price to build a property in line with its global format. After finalising a location, the company usually takes two years to roll out. In an interview last year, Juvencio Maeztu, Ikea's India chief executive, said patience had kept Ikea going in spite of entry hurdles. The € 27- billion retailer had then said it planned to invest what it takes in the India market but would wait to find the right location. While noting the € 1.5- billion (₹ 10,500 crore) investment was connected with establishing retail stores for 15 years, Maeztu had said: " We will invest as much as we need to in India. It's not that we have got a budget to follow." According to the firm, Ikea stores must be big and these need to be close to the motorway and have metro connectivity. It is planning 10 stores first and then 15 over 15 years. Ikea's ₹ 10,500- crore investment proposal has been the biggest in the single- brand retail sector; H& M's is ₹ 700 crore REUTERS/ BLOOMBERG Ikea may open store in Noida; H& M in New Delhi's Select City Mall |
| HC admits 2nd winding- up petition against KFA |
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Bangalore, 17 January After United Breweries Holdings Limited ( UBHL), a second windingup petition has been admitted in the high court here against Vijay Mallya's grounded carrier Kingfisher Airlines Limited ( KFA). Ananda Byrareddy admitted the petition by a consortium of banks, led by the State Bank of India ( SBI) on Friday, a month after a similar petition was admitted from the UK- based engine service provider, Aerotron. The news comes a day after Mallya had been summoned by the Delhi high court to appear on February 14 in a case by Delhi International Airport Ltd ( DIAL) on bounced cheques of ₹ 1 crore from Kingfisher. The company said, " We always comply with the law and judicial orders." Mallya was summoned by the Karnataka high court in September last year on non- payment of dues to creditors, but failed to make an appearance. Besides DIAL and Bangalore International Airport, Kingfisher has defaulted on loans to the income- tax department, vendors and lessors and several public sector banks. At ₹ 1,600 crore, SBI has the largest exposure to the carrier among banks. Aerotron has sued the airline for $ 6- million (₹ 35 crore) dues. Noting the airlines had not opposed or responded to valid notices from the creditors claiming the company was commercially insolvent and, hence, unable to pay its dues, the judge on Friday determined the claim of the consortium of banks "bona fide" and prima facie admitted the petition. Kingfisher has total dues of ₹ 7,400 crore to its creditors. Mallya said the company was in talks with an unidentified investor to revive the airline and has repeatedly requested the courts for more time to pay its creditors and employees. On Friday, the counsel for the airline again requested for additional time to provide details on the progress on the claimed investment into the airline, despite the due- diligence process being completed. "The entire process has been under cover and nobody knows what is going on. The investor may or may not take this up," the judge said. The court has directed the company to provide an update on the matter by March 7, failing which an advertisement would be published in newspapers detailing the admittance of the wind- up petition. Following the publication, other creditors to the airline can approach the court staking their claims to dues from the airline. Two similar petitions have been admitted by the court against UBHL, filed by BNP Paribas and Avions de Transport Regional, part of a group of five lenders fighting for dues of ₹ 600 crore. At ₹ 1,600 crore, SBI has the largest exposure to the grounded carrier among banks Kingfisher Airlines has dues of ₹ 7,400 crore to its creditors BLOOMBERG |
| Alternative fund registrations short of Sebi estimates |
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Mumbai, 17 January The number of alternative investment funds or AIFs lining up for registration with the regulator were far fewer than what the Securities and Exchange Board of India ( Sebi) had expected at the beginning of the year, largely due to of a poor investment environment, said experts. Nehal D Sampat, associate director, tax and regulatory services, at PricewaterhouseCoopers, said investor sentiment during the year had not been conducive to raising capital, which might have had an impact on the number of registrations. "The fund- raising environment has been challenging. We might see an uptick as the markets improve and investors are more ready to commit fresh capital," he said. Yogesh Chande, consultant, Economic Laws Practice, agreed the lacklustre environment probably hit registrations. "The fund- raising environment has not been very good with the uncertain political environment and adverse economic news," he said. The number has fallen short by approximately 30 per cent, suggest revised budget estimates made public as part of the regulator's December board meeting agenda. It had expected to collect about ₹ 7 crore through registration fees when it prepared its budget at the beginning of the financial year. This has since been lowered to around ₹ 4 crore. "The number of application for registration of Alternative Investment Fund and Investment Advisors has not been as per the budgeted expectation… resulting into downward revision of budgeted amount from ₹ 7.20 crore to ₹ 4.50 crore," said the budget document. There have only been 77 funds registered under the AIF regulations, as of September 30, Sebi data shows. It had budgeted for 520 applications through the year. The regulator's AIF regulations cover funds, including private equity players, venture capital investors and even hedge funds. The regulations sought to rationalise the rules governing such funds and were issued in 2012. Meanwhile, even as domestic fund raising has hit a rough patch, foreign funds aren't easy to come by. An Ernst & Young report titled 'Private equity: breaking borders' had said foreign fund raising norms could be made easier for AIFs. "Foreign investment in Sebi- registered AIFs ( and in feeder fund vehicles constituted in India to invest in AIFs) should be allowed under the automatic approval route irrespective of the legal constitution of AIF ie., whether the AIF is constituted as a trust, limited liability partnership, company or other body corporate," said the report issued in June 2013. LOSING LUSTRE |Sebi had budgeted for ₹ 7.2 crore from AIF registrations, expected 550 applications |Political uncertainty, economic woes hit sentiment |Fund- raising affected, registrations fall |Number of registered AIFs is 77, as of September |Sebi revises fee estimate downward to ₹ 4.5 crore |
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