Mumbai: Shares of Zee Learn Ltd on Thursday jumped as much as 7.3% after the company said it will hold the merger with Tree House Education and Accessories Ltd for now on concerns over the swap ratio. It added that it will reconstitute a committee to look at options to salvage the deal.
The stock, which gained for the fourth consecutive session, touched a high of ₹ 31 in the morning trading. The scrip closed 1.38% higher at ₹ 29.30. Since 27 May, it has gained 4.6%, while it has fallen 25.45% so far this year.
Tree House Education lost 3.75% to ₹ 59 apiece on BSE. The stock fell for three out of four sessions. Since 27 May, it has fallen 25%, while so far this year, the stock is down 66.44%.
“Zee Learn Ltd will not be going ahead with the currently agreed share exchange ratio of 53 fully paid equity shares of Re1 each of Zee Learn Ltd for 10 fully paid equity shares of ₹ 10 each of Tree House," the company said in a notice to BSE.
Zee Learn added in the notice that it will reconstitute the merger evaluation committee with the authority to look into and suggest ways to salvage the deal with Tree House, which will keep the interest of its stakeholders intact.
In the March quarter, Tree House reported a net loss of ₹ 34.60 crore on higher expenses. This was the first quarterly loss for the company since March 2011, according to Capitaline. The company reported a net profit of ₹ 17.12 crore in the year-ago period. Net sales fell 46% to ₹ 27.27 crore from ₹ 50.68 crore a year ago. Total expenses jumped 123% to ₹ 60.30 crore.
“The accounting estimates of the company with respect to bad debts of pre-school of the company has been changed from 0 to 50% for receivables more than 90 days, this change resulted in decrease of net profit of ₹ 22.46 crore," the company said in its earning release.
As of September, the company had total cash and balance of ₹ 151.37 crore, which mysteriously fell to ₹ 22.12 crore as of March 2016. As of 31 March, Tree House has a total debt of ₹ 98.92 crore.
Zee Learn had on 4 December 2015 said in a BSE filing that it had received approval from its board to explore consolidation options with Tree House.
At present, Zee Learn runs around 1,600 pre-schools, while Tree House operates around 700 centres across the country.