Subhash Chandra, chairman, Essel group (Photo: HT)
Subhash Chandra, chairman, Essel group (Photo: HT)

Essel  clears some dues with first tranche of ZEEL stake sale  funds

  • Essel group has completed the sale of 8.7% stake in ZEEL, out of the 11% announced in July, to Invesco markets fund
  • Over the last few days, the group has repaid 3,356 crore to mutual funds from the money received from the stake sale

Mumbai: Subhash Chandra-led Essel group has received the first instalment of money from its stake sale in flagship firm Zee Entertainment Enterprises Ltd (ZEEL), as it races to meet a month-end payment deadline.

In July, Essel group announced the sale of 11% stake in ZEEL to Invesco Oppenheimer Developing Markets Fund for 4,224 crore. Of this, the sale of 8.7% stake has now been successfully concluded, the group said in a statement. The exact amount received was not disclosed.

“The group is confident of completing the balance sale of 2.3% stake over the next few days. The group is working towards timely completion of operational formalities in order to conclude the entire transaction at the earliest. This development reaffirms the group’s positive progress on its overall asset divestment approach undertaken to generate adequate liquidity for the repayment process. The group is also working actively on further divestments including its non-media assets and remains confident to complete the same," the statement said.

Facing a payment crisis in February, Essel group entered into a standstill agreement with mutual funds holding its debt securities, under which the funds agreed to refrain from selling ZEEL shares they held as collateral till 30 September, giving Essel time to sell assets to repay them.

Over the last few days, the group has repaid 3,356 crore to mutual funds from the money received from the stake sale, a person aware of the development said, adding that Essel owes a total of 7,500 crore to creditors.

Still, there is a large gap to fill. Sales of its non-media assets—particularly Essel Infrastructure—are hanging fire. On 30 August, Essel group said it would sell 205MW of its operational solar energy assets to Adani Green Energy Ltd at an enterprise value of 1,300 crore. Bloomberg has reported that the group was in talks with the National Investment and Infrastructure Fund to sell six of its road projects, while The Economic Times has reported that Sachin Bansal, co-founder of Flipkart, is keen on buying its mutual fund and finance businesses. For infrastructure assets, the group will have to first settle project-specific debt.

Neil Borate contributed to this story.