: If an agreement is reached, it could fetch DE Shaw Rs. 170-200 cr for its 18% stake in the newspaper publisher : New Delhi: New York-based private equity (PE) firm DE Shaw Group, which had acquired an 18% stake in Amar Ujala Publications Ltd in 2006 for Rs. 117 crore, may be close to arriving at an out-of-court settlement with the newspaper publisher that it’s been locked in a legal battle with since October 2010, according to two people familiar with the development.
If a settlement, which is close to being finalized according to a third person familiar with the development, is arrived at, DE Shaw could get Rs. 170-200 crore for its stake. One of the two persons cited above said it was premature to talk of money before a deal was arrived at, but confirmed that DE Shaw and Amar Ujala were in talks for a settlement. None of the three wanted to be identified.
DE Shaw’s India head Anil Chawla declined to comment on the issue, while the fund’s senior vice-president Randhir Kochhar said he is not authorized to speak to the media. In October 2011, DE Shaw approached the Delhi high court under the Arbitration Act to ask for an interim order before both sides started arbitration on the case, according to court documents and lawyers familiar with the matter.
When both parties failed to decide on the constitution of the arbitral tribunal, the dispute was escalated to the Supreme Court, where it is scheduled to be heard on 29 March. DE Shaw’s counsel had argued at a hearing on 23 January that “considerable amount of prejudice has been caused to (DE Shaw) financially and, therefore, the matter needs to be decided expeditiously”.
On 29 January, lawyers for both parties requested justice G.S. Sistani of the Delhi high court to adjourn the case since they were “exploring the possibility of an amicable settlement”. The court granted both sides till 19 April, after which it would decide the matter itself, the bench said. The parties also filed a letter before the Supreme Court suggesting that the matter could be resolved out of court.
DE Shaw decided to divest the Amar Ujala stake under its “exit rights”, when the publisher failed to publicly list shares within four years of signing the investment agreement with the PE fund. Amar Ujala’s resistance to this led to the legal battle. DE Shaw also asked the newspaper for a 25% return on its investments, which was contested by Amar Ujala. It was suggested in the hearings before the Delhi high court that KPMG could be appointed to audit Amar Ujala.
When Amar Ujala signed the deal with DE Shaw, the newspaper was run by Atul Maheshwari, who died in January 2011. The newspaper is now being overseen by his brother Rajul Maheshwari, who didn’t respond to an email on the possible settlement, its terms, and how it would be funded.
The dispute between DE Shaw and Amar Ujala escalated when the minority investor wanted to use its “drag along right”, under which it could sell its stake to any potential buyers, including rivals, and force the original promoters to sell out at the same price.
A second person from the three mentioned earlier said Amar Ujala would rather raise debt from a consortium of banks than sell a stake to a strategic investor. Investment banking and media circles have long been abuzz about the interest of large media firms in Amar Ujala. Currently, a holding company in which the Maheshwaris and their partner Ashok Agarwal are the dominant shareholders, owns 30% of the newspaper. The Maheshwaris own another 38% separately while Agarwal and his son own 14%. The remaining 18% is held by DE Shaw.
Incidentally, the Maheshwaris are also at war with Agarwal and his son Manu Anand and there is a litigation pending before the Company Law Board and the Delhi high court related to this. Anand has alleged the oppression of minority shareholders and mismanagement by the company. DE Shaw’s stake in Amar Ujala was routed through a Mauritius-based investment vehicle, DE Shaw Composite (Investments) Mauritius Ltd. Blackstone, another US-based PE firm, invested Rs. 225 crore in Dainik Jagran in 2011.
Hindustan, a Hindi daily published by Hindustan Media Ventures Ltd (HMVL), competes with Amar Ujala in some markets. HMVL is a subsidiary of HT Media Ltd, publisher of Mint and the Hindustan Times.
लाइव मिंट में प्रकाशित Shuchi Bansal & Nikhil Kanekal की स्टोरी. इसमें Deepti Chaudhary का भी योगदान है.
