Mumbai: Debt-ridden Essel group is looking to sell a minority stake in broadcaster Zee Entertainment Enterprises Ltd (ZEEL) to a financial investor by the end of July to meet immediate payment obligations, said two people directly aware of the matter.
This will be in addition to its ongoing efforts to find a strategic buyer, as well as sell some of the group’s infrastructure assets, the people said on condition of anonymity.
Subhash Chandra-led Essel group has been in talks with potential buyers, mainly strategic investors, to sell the promoters’ stake in ZEEL since it was announced in November. The sale of a minority stake in ZEEL to a financial investor will take care of the immediate debt owed to mutual funds and banks.
“Overall, Zee is looking to sell up to 50% in the business, which could be to a strategic or a financial investor or both," one of the two people cited earlier said. “The months of August and September will be devoted to getting regulatory clearances, so July is a sacrosanct deadline. The sale of non-media assets (primarily infrastructure) will be announced as early as this month."
Essel group owes mutual funds (MFs) over ₹7,000 crore. The MFs had invested in papers issued by Essel group firms, which were backed by shares pledged by the promoters. The fund houses had agreed to refrain from selling the pledged shares to recover dues till September-end. The total debt on the books of Essel as of December is ₹16,237 crore, whereas the promoter debt is ₹13,000 crore.
A ZEEL spokesperson said: “The process of ZEEL’s stake sale is at an advanced stage. The group has already received two non-binding term sheets. The stake sale process is well within the purview of the September 2019 deadline. Any additional details cannot be shared at this stage due to confidentiality agreements."
In a related development, fund houses appointed P.J. Nayak, former chairman and CEO of Axis Bank, as a mediator for talks with Essel group.
Nayak’s appointment, the people cited earlier said, is an effort towards ensuring that there is seamless transmission of information from Essel group to its 11 lenders. “Nayak will oversee repayments to lenders on the basis of their claims as soon as the asset sale concludes," said the second of the two people cited earlier.
Essel group recently sold two transmission assets owned by Essel Infraprojects Ltd—Darbhanga-Motihari Transmission Co. Ltd and NRSS XXXI (B) Transmission Ltd—to a fund managed by Edelweiss.
It has also closed a deal with Caisse de dépôt et placement du Québec, Canada’s second-largest fund manager, for Essel Infraprojects’ three road projects, Mint reported on 16 May. The assets were expected to fetch a combined enterprise value of ₹3,300-3,500 crore, the report said. The entire proceeds of the sale will be used for debt repayment.
Mint reported on 14 March that Japanese electronics and entertainment giant Sony Corp. was in advanced talks to buy a stake in ZEEL and form a strategic partnership.