Essel Group Nears Second Stake Sale In Zee Entertainment: Exclusive

As part of the process, mutual funds will transfer shares of the broadcaster offered as collateral by the Subhash Chandra-led group into an escrow account, the people told BloombergQuint on the condition of anonymity.

About 5.5 percent of Zee Entertainment’s total equity pledged with mutual funds will be moved into the separate account, so the promoters can eventually sell the shares, one of the persons quoted above said. The promoters are in talks with large long-only funds and strategic investors for a stake sale, the person said.

Promoters held 22.37 percent stake in Zee Entertainment as of September, according to exchange filing. Of which, 96 percent is encumbered with domestic mutual funds, financial institutions and foreign lenders. This also includes the 10.7 percent stake pledged with Russian lender VTB. Promoter holding in the broadcaster was mostly diluted in the last three quarters as lenders invoked pledged shares after stock price tumbled in February. The promoters held 41.62 percent in Zee Entertainment as of December 2018.

Essel Group, in all, needed to repay asset managers and non-bank financial companies Rs 11,000 crore. In September, it repaid half of the amount, or Rs 4,450 crore, by selling up to 11 percent stake in the broadcaster to Invesco Oppenheimer Developing Markets Fund. Total promoter debt obligation currently stands at Rs 7,000 crore, of which Rs 5,000 crore is owed to domestic lenders.

A company spokesperson, in an emailed statement to BloombergQuint, said Essel Group is in constant dialogue with all lenders and exploring various proposals received from prospective partners to complete the repayment process. But the spokesperson refused to divulge additional details at this stage due to confidentiality agreements.

Shares of Zee Entertainment rose nearly 18 percent—the most in nine months—during the day, compared with a flat Nifty 50 Index.