Hyderabad: Recently concluded deal between Associated Broadcasting Company Ltd (ABCL), the operator of the TV9 Channels, and other biggies in the market like MyHome group has ran to trouble as the Hyderabad bench of the NCLT has restrained ABCL from selling its shares or assets until further orders based on the petition moved by SAIF Mauritius(a Fund of SAIF Partners) accusing venture capitalist Chintalapati Srinivas Raju and his firms of accounting fraud and siphoning off money from a company where the private equity firm had made an investment.
SAIF Mauritius sought to block the deal, claiming that the funds it invested ten years ago in IVision Media, another company controlled by SriniRaju, were given to ABCL as interest-free loans without its consent and as part of a ploy to siphon off the money.
The action of SAIF partners is a usual practice by any adjudicating authority to protect the interests of the petitioners airing serious concerns over the safety of their investments.
Raju and his associates controlled ABCL with a nearly 82% stake, which they recently agreed to sell to a consortium of two Hyderabad-based infrastructure groups for around Rs 460 crore. TV9 Chief Executive Ravi Prakash and other employees own around 18% of the broadcaster.
According to its petition, In August 2008 SAIF had invested Rs 50.37 crore for an 80% stake in IVision Media, which had proposed to take up collection of news content for distribution to print media, radio channels, TV channels, Internet portals and others. The Mauritius investment firm claimed it was assured that IVision Media would be merged with ABCL and it would get a 14.29% stake in the merged entity.However, the proposed merger did not happen and IVision Media’s business hasn’t taken off and its net worth saw substantial erosion. Though Raju kept promising to resolve the issue by identifying a third-party buyer, neither the contractual obligations nor its exit rights were honored, the fund alleged.
In its counter plea filed before the tribunal, ABCL said SAIF was making false allegations as the investment by IVision Media had the approval of the PE firm’s nominees on its board. The investment was also disclosed in ABCL’s financial statements, it said.
Raju denied any wrongdoing, and according to him NCLT interim order wouldn’t affect him since he had already completed the sale of the stake.
This unexpected development has resulted in ambiguity over the ABCL buyout deal announced recently and further hearing at NCLT will determine the future course.
In the past also ABCL has witnessed half a dozen such ill-fated deals that constantly eroded the value and fortune of the company.
