Subhash Chandra retains control of ZEE despite founder's stake in company reduced to 5%

  • Foreign funds, including GIC Pvt Ltd, BlackRock, HSBC Global, Fidelity India and Norges Bank bought the pledged promoter stake in ZEE

  • Of the 16.5% planned divestment, the group seeks to sell 2.3% stake in ZEEL to OFI Global China Fund/its affiliates

  • In September this year, the group had sold 11% in ZEEL to Invesco-Oppenheimer fund for over Rs 4,224 crore

Zee Entertainment Enterprises founder Subhash Chandra can retain the control of the media firm despite his stake in the company declined to just 5 percent after institutional investors bought 15.7 percent stake, said a report in Mint.

Foreign funds, including GIC Pvt Ltd, BlackRock, HSBC Global, Fidelity India, Norges Bank, Marshall Wace, Wellington Management and local investors such as SBI Mutual Fund and Reliance Mutual Fund bought the pledged promoter stake in Zee Entertainment Enterprises Ltd (ZEEL) through a series of block deals on Thursday, the report said.

On Thursday, shares of ZEEL zoomed over 12 percent after Chandra-led Essel Group said it was planning to sell 16.5 percent stake in its flagship firm to meet its loan repayment obligations, reported PTI.

 Subhash Chandra retains control of ZEE despite founders stake in company reduced to 5%

A file photo of Subhash Chandra. News18

The scrip jumped 12.40 percent to close at Rs 345.25 on the BSE. During the day, it zoomed 14.99 percent to Rs 353.20. On the NSE, it climbed 11.72 percent to close at Rs 343. During the trade it advanced 18.56 percent to Rs 364.

Of the 16.5 percent planned divestment, the group seeks to sell 2.3 percent stake in ZEEL to OFI Global China Fund/ its affiliates.

After these transactions, the overall holdings of the group in the Chandra-led ZEEL will come down to 5 percent, of which the encumbered holdings of the group will come down to a low 1.1 percent of ZEEL," the company said in a statement.

Essel Group entities hold 22.37 percent in Zee, of which over 90 percent or 21.48 percent, are pledged as collaterals against finances availed by them through NCDs.

After retiring a lot of debt, the Essel Group still has a debt of around Rs 6,000 crore.

"Essel seeks to sell up to 16.5 percent stake in ZEEL to financial investors to repay loan obligations to certain lenders for whose benefit such shares are currently encumbered and who have consented to such share sale by it," the company  said in a statement.

In September this year, the group had sold 11 percent in ZEEL to Invesco-Oppenheimer fund for over Rs 4,224 crore and then retired debt worth Rs 4,000 crore.

The Atlanta-based Invesco had already held 7.74 percent in ZEEL since 2002. The group was also reportedly in discussions with other buyers to sell another 7-8 percent stake and repay the lenders in full.

Late August, it announced a deal to sell the 205 MW solar assets to Adani Green Energy for Rs 1,300 crore.

Chandra had first announced that he would be selling half of his family's holding in Zee last November without attributing any reasons, and followed that up with an admission of severe financial stress late January.

Aggravating the situation for Chandra was a massive sell-off in the shares ahead of the January admission, which was attributed to interests sabotaging the stake sale plans.

The family-owned 35.79 percent of ZEEL as of June, of which over 64 percent are pledged with lenders. After this deal, the family holding will go down to around 24 percent.

With PTI inputs

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Updated Date: Nov 22, 2019 17:59:46 IST


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