ZEEL promoters sell 11% stake to Invesco Oppenheimer for Rs 4,224 cr

MUMBAI: Multi-faceted business conglomerate Essel Group has announced that Invesco Oppenheimer Developing Markets Fund (The Fund) has agreed to make an additional investment in ZEE Entertainment Enterprises Ltd. (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 agreed to pay Rs 400 a share for ZEEL which is a 10.7% premium to ZEEL’s Wednesday closing price of Rs 361.45 on BSE.

Invesco Oppenheimer is an existing investor in ZEEL with 7.74% stake. The acquisition of additional 11% stake will take its shareholding in the company to 18.74%. Consequently, the promoter group’s shareholding will fall to 24.79% from the current 35.79%.

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.

Speaking on this development, ZEEL MD and CEO Punit Goenka said, “I’m extremely glad to share that the Fund as a Financial Investor has further reposed its faith in ZEEL. It also gives me immense pleasure to note their strong belief and trust in the intrinsic value of our precious asset. It is the valuable belief and support of our esteemed financial investors that enables us to consistently generate great value, year after year.”

The company said that the announcement of 11% stake sale of ZEEL to the Fund is a strong step in the overall divestment process, giving the Promoters the required financial fillip to initiate the repayment process.

The Invesco Oppenheimer Developing Markets Fund, which is an investment company registered with the US Securities & Exchange Commission, has a long history of investing in India as a financial investor. The fund has been a financial investor in Zee Entertainment Enterprises Ltd. since 2002.

Along with ZEEL, Essel Group is also in the process of divesting some of its Non-Media Assets. Essel Group is confident to complete the overall process of repayment, well within the agreed timeline.

Recently, Goenka had told analysts during the first-quarter earnings conference call that it has received one binding offer while another one is coming up in a few days.

He had also stated that the promoters will evaluate both the deals and make an announcement in a few days. If the second offer doesn’t come then the promoters will go ahead with the offer on the table, Goenka had said.

“We already have one binding offer on the table at the moment and there is another one coming up. The family will evaluate and see how the transaction will impact our strengths to take a call soon,” Goenka had said.

On 26th January, Essel Group chairman Subhash Chandra had promised that he will clear the debt of lenders by selling atleast 50% stake owned by the promoters in his crown jewel ZEEL.

He had also admitted having made wrong decisions like making incorrect bids in the infrastructure business and the merger of direct to home (DTH) operator Videocon d2h with Dish TV. He had also alleged that some negative forces are out to sabotage his efforts to raise money through a strategic sale in the flagship company ZEEL.

In January, the Essel Group had sealed a formal agreement with its lenders, under which it gets time till September to deleverage or pare its debt. On 25th January, Essel group companies saw a combined erosion of Rs 13,352 crore in market valuation following reports that a promoter entity is being probed for cash deposits after demonetisation.

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