Zee Media's Loan Settlement Rejected By Diligent Media
Zee Media's related party transaction rejected by shareholders of the related party.
Zee Media's institutional shareholders were defeated on Dec. 14, after a resolution to settle-cum-write off a loan to a related party, Diligent Media Corporation Ltd., was passed by public shareholders despite the institutional investor opposition.
But, a curious turn of events has since scuppered the related party transaction. Their equals on the other side of the fence found the deal untenable, and won.
Not a single public institutional investor vote at Diligent Media supported the settlement resolution.
The agreement, which involved the transfer of all Diligent Media trademarks including that of primetime brand DNA to Zee Media, failed after 74.18% of the votes cast were against it. Though most public non-institutional shareholders voted in favour of the settlement, their votes were outnumbered by institutions. Being a related party transaction, promoters had to abstain from voting.
Diligent Media Shareholding
Interestingly, the issue stems from Diligent Media's inability to pay its liabilities of Rs 309.3 crore to Zee Media. The settlement agreement valued Diligent Media's trademarks at Rs 170 crore. In addition to their transfer, Diligent had to pay another Rs 12 crore to settle the entire amount.
This would have resulted in a write-off of more than Rs 127 crore for Zee Media, yet the transaction failed at the Diligent end.
Both, Zee Media and Diligent Media are part of the Essel Group promoted by media baron Subhash Chandra. While Zee Media runs over 14 television channels, Diligent Media was founded as a newspaper company in joint venture with the Bhaskar Group, that later exited. It runs the DNA newspaper and its digital platforms.
Zee Media informed stock exchanges on Dec. 15 that the proposed settlement with Diligent Media stands deferred.