Over 90% of promoter stake in ZEEL is pledged: Punit Goenka
MUMBAI: Zee Entertainment Enterprises Ltd (ZEEL) MD and CEO Punit Goenka has said that over 90% of promoter stake in the company is pledged with the lenders. He also stated that there is a possibility that the promoters may have to sell their entire stake to repay debt.
He was addressing analysts following a disclosure made by VTB Capital on Friday regarding encumbrances over the shares of ZEEL that are held by Essel Media Ventures. The promoter stake in ZEEL currently stands at 22% while outstanding debt repayment obligation is Rs 7,000 crore.
“Even if left with single-digit holding, I will be willing to work with the company if the due process allows it.” Goenka did not rule out the possibility of promoters having to sell their entire stake in Zee Entertainment if required to pay lenders,” Goenka stated.
Goenka said that the promoters are looking to resolve the issue of debt repayment in three months. He stated, “We are looking at all problems. Whatever stake promoters are left with, I am committed to the company. If the process allows, I will continue to run the company. We are looking to resolve this in three months.”
While noting that VTB Capital’s pledging was not a direct one, Goenka stated that the disclosures were made due to Sebi’s new norms on such disclosures. VTB Capital can invoke and sell shares in ZEEL. “After one year, they can sell shares directly. VTB is a long-term investor and has supported the promoters and I hope they will work in the same way,” he added.
Essel Group had an agreement with lenders to repay the entire debt by 30th September. However, the Essel Group failed to pay back the entire debt by the said deadline leading certain mutual funds to sell the pledged shares. This brought down the promoter holding in the company even further.
Recently, Essel Group had successfully completed the first tranche sale of the first tranche of ZEEL’s stake to Invesco Oppenheimer Developing Markets Fund (The Fund). The first tranche of the transaction comprising the sale of 8.7% stake in ZEEL has been successfully concluded. The group had said that it is confident of completing the balance sale of 2.3% stake over the next few days.
In July, Essel Group had announced that Invesco Oppenheimer Developing Markets Fund (The Fund) has agreed to make an additional investment in ZEEL. The Fund has agreed to buy up to an 11% stake in ZEEL from its promoters, for a total consideration value of up to Rs 4,224 crore. Invesco has paid Rs 400 a share for ZEEL which is a 10.7% premium to ZEEL’s 31st July closing price of Rs 361.45 on BSE.
Essel Group had initiated the process of divesting its key assets, with an aim to repay all the lenders by September 2019. During this divestment process, the group has received a positive response from multiple partners expressing interest to buy the stake in ZEEL and the other key Non Media Assets.