Essel Group lenders seek personal guarantee for payment obligations from chairman Subhash Chandra

Lenders of the troubled Essel Group have reportedly asked chairman Subhash Chandra to provide a personal guarantee for payment obligations, a media report said.

According to Business Standard, the group of lenders to Zee mainly comprises mutual funds that include Aditya Birla Sun Life MF, HDFC MF, Franklin Templeton, and ICICI Prudential MF.

Aditya Birla Sun Life MF’s debt exposure in the form of loans against Zee group shares was to the tune of about Rs 2,700 crore, said The Hindu Business Line.

HDFC Mutual Fund and Franklin Templeton’s debt exposures were about Rs 1,200 crore and Rs 1,000 crore respectively.

On Sunday, the Essel group said it had sealed a formal agreement with its lenders, under which it gets time till September to de-leverage or pare its debt.

The formal agreement gives the lenders more powers and greater control over the developments Zee group, according to Business Standard.

The report said that over 150 debt MF schemes have exposure to the Essel group bonds and debentures.

The agreement was with those lenders who have taken pledged shares of the group flagship and listed entities, Zee Entertainment Enterprises and Dish TV India.

Following media reports suggesting that the moratorium till September was not discussed with Securities and Exchange Board of India (SEBI), Essel Group on Monday said there was no need to take permission from the market regulator.

“Essel Group wishes to state that we have not sought any permission from SEBI, as there is no regulatory requirement,” the company was quoted as saying in a statement by The Economic Times.

Essel group’s promoter entities sold shares worth over Rs 1,050 crore in six listed group firms in open market between 25 January and 1 February, 2019, for paying off lenders who were not part of an agreement to prevent the declaration of default on loans against pledged shares.

According to multiple regulatory filings by different promoter group entities of Essel group, shares of Zee Entertainment Enterprises, Dish TV, Zee Media Corporation, Siti Networks Ltd and Zee Learn were sold in open market.

Sources said the promoters sold the shares in order to pay off lenders who were not part of the pact announced on 27 January, under which 97 percent of the group’s lenders agreed not to classify loans against pledged shares as “default”.

On 25 January, 2019, Essel group companies had come under massive selling pressure, plummeting up to 33 percent, and suffered a combined erosion of Rs 13,352 crore in market valuation.

On 26 January, Essel group Chairman Subhash Chandra said his company was in a financial mess and had blamed the same for the aggressive bets on infra, which had gone out of control since the IL&FS crisis and also the acquisition of Videocon’s D2H business.

Apologising to lenders, Chandra also said some negative forces are out to sabotage his efforts to raise money through a strategic sale in the flagship company Zee Entertainment Enterprises.

With inputs from PTI