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Liberty carried out ‘due diligence’ in India -
Liberty carried out ‘due diligence’ in India
Written by Chris Forrester
Tuesday, 05 January 2010 20:20
Worldspace India, despite having formally ceased operations locally, has issued a statement regarding the pre-closure position of Liberty Media. Liberty, says the statement “carried out formal due diligence on Worldspace’s Indian operation” – and then pulled the financial plug.
The statement is, at least in part, an attempt to redress some of the stories that have emerged these past weeks alleging incompetence, and worse, amongst some key Worldspace India staffers.
The statement was also made in order to “clarify doubts relating to the credibility of the operations of Worldspace India and its employee” and says that Liberty Media conducted a detailed examination of the India operations in September and October 2009, using reputed Indian firms.
“Senior officials of Liberty Media,” says the statement, “were in regular touch with the Worldspace India team and were given to understand that they were keenly interested in the Indian operations. Against all odds in these difficult circumstances, the India team did their best to meet the aspirations of our Indian subscribers and successfully spearheaded Worldspace India to its best ever financial and business performance in the last 12 months. All along, no instructions were issued to Worldspace India to stop the sales of the receivers and subscription packs of Worldspace, Inc., and the service agreement was still in force. The employees in India continued operations in the ordinary course, being led to believe that the operations would be sold along with the assets as a going concern,” the statement adds.
Liberty’s Chief Restructuring Officer (CRO) told Worldspace India during Christmas week that Liberty would not be acquiring the India operations, although Liberty would be proceeding with the acquisition of the parent company’s assets. It seems the Indian operation was then left to fend for itself. “However much the India team would like to continue operating and servicing its subscribers, it has become impossible because of the non-availability of the Worldspace satellite for Indian operations, which has been the sole distribution vehicle for its content,” the statement says.
Worldspace India’s team stresses it was neither a party to the decision to close down the Indian operations nor was aware of this possibility till this decision was communicated by the US headquarters, in the later part of December 2009.
“While it is learnt that Liberty Media and Worldspace Inc, USA have cleared employee dues and followed due process in every other country, certain loopholes in the Indian legal system are being misused to escape from the responsibilities of orderly closure of the business, which has led to this situation where both subscribers to the service and employees of the company are badly affected,” the statement added.
The statement claims that Worldspace Inc (in Chapter 11 bankruptcy) owes Worldspace India about $10m for services carried out locally. Worldspace India’s staff have made formal representations to the relevant ministry in this matter, the statement says.