Subhash Chandra moves to raise Dish TV stake

Subhash Chandra (Mint)
Subhash Chandra (Mint)


Subhash Chandra has also put forward a proposal to buy other assets, including shares in the educational company Zee Learn Ltd and three properties

MUMBAI , BENGALURU : Media mogul Subhash Chandra is in talks with JC Flowers Asset Reconstruction Co. (ARC) to buy back his family’s shares in Dish TV India Ltd, marking another twist in the two-year-old battle between the minority investor and the promoter for control of India’s third-largest satellite TV operator.

Chandra, 72, has also put forward a proposal to buy other assets, including shares in the educational company Zee Learn Ltd and three properties, including a bungalow built over 2.8 acres in central Delhi. Chandra has proposed to pay JC Flowers 1,500 crore to buy these assets, two executives privy to the development said.

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Graphic: Mint

On Thursday, Dish TV shares ended trading at 19.31 a share, giving it a market value of 3,555 crore. This implies JC Flowers’ 24.19% stake in the satellite TV operator is worth 860 crore.

“Chandra has approached JC Flowers for a settlement. JC Flowers is looking at a comprehensive settlement, which includes the entire portfolio," said the first person aware of the matter.

JC Flowers ARC is currently evaluating the offer proposed by Chandra, even as the executive termed the battle for control of Dish TV as a boxing match that has gone on for “too long" and is beginning to hurt minority investors.

However, Chandra’s offer to buy back Dish TV shares could prove to be far from a straightforward transaction on account of legal and regulatory challenges, according to a second executive privy to the development.

“The source of how 1,500 crore will be raised by him (Chandra) is not clear. This is important because there are many creditors whose dues have still not been cleared by Essel Group. They could ask for their dues to be cleared first."

A third executive said since the share pledges were invoked in lieu of not servicing the loans and now the shares are being returned, this may not trigger an open offer by the promoter. Mint could not independently verify this. The current rules governing public companies say an entity’s ownership crossing 25% makes it mandatory for them to make an open offer to the public to buy an additional 26% shares.

Chandra family owns 4.04% of Dish TV, and the family’s ownership will rise to 28.2% if the transaction is concluded.

An email sent to a spokesperson for JC Flowers went unanswered. An email sent to Chandra’s spokesperson did not elicit a response.

Although some believe the proposed transaction is being done at a “super cheap" price, a bank executive said it is not just simple. “There are different thought processes (for a bank and an ARC). Yes Bank had a more principle-based approach, while the ARC could be focussed on recovery. Nothing is right or wrong. The ARC’s objective may be different," a fourth executive explained.

Chandra had borrowed about 5,000 crore from Yes Bank in 2016, and his inability to service the loans made the lender invoke the Dish TV shares that were pledged and take control of the real estate assets that were put up as guarantees. In September 2021, Yes Bank first blew the bugle of revolt when it pressed the board of Dish TV to convene a special shareholder meeting and sought a reconstitution of the board of Dish TV, expressing its unhappiness with the way the company was run.

Over the past 22 months, Dish TV has declined to convene a special shareholders meeting while minority investors have booted out five directors from the board, including chairman Jawahar Goel and chief executive Anil Dua. In December, Yes Bank transferred its non-performing loans, worth 48,000 crore, to JC Flowers ARC. Yes Bank owns a 9.99% stake in the ARC.

A senior executive of the bank, Akash Suri, who led its fight against Dish TV, was to take over as the chief executive of JC Flowers ARC.

Then in March, Subramaniam Swamy, a former member of parliament, filed a public interest litigation in the Delhi high court, calling Yes Bank’s transfer of bad loans to JC Flowers ARC as ‘fraudulent’.

Swamy also asked the Reserve Bank of India to investigate the transaction.

“[A] considerable amount of ex-employees of Yes Bank are now found to be employed at JC Flower ARC, which clearly raises suspicion on the way the concerned transaction was executed," Swamy wrote to RBI governor Shaktikanta Das in a letter dated, 4 March.

Mint reviewed a copy of Swamy’s 228-page petition.

Last month, RBI refused to stamp its approval on Suri’s appointment as the CEO of JC Flowers ARC. Chandra spent 300 crore in 2015 to buy the central Delhi bungalow at Delhi’s Bhagwan Das Marg, although his complaint before Debt Recovery Tribunal DRT, Jaipur, pegs its value at 1,000 crore, according to court records reviewed by Mint.

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