Subhash Chandra to sell 16.5% stake in Zee2 min read . Updated: 21 Nov 2019, 12:51 AM IST
- Sale will see Essel Group’s stake plunge to around 5% in the firm
- The 16.5% stake includes a 2.3% stake which is in the process of being sold to OFI Global
The conglomerate said on Wednesday that it plans to sell an additional 16.5% stake in Zee Entertainment Enterprises Ltd (ZEEL) to meet repayment obligations. The deal includes a 2.3% stake which is in the process of being sold.
“The group seeks to sell up to approximately 16.5% stake in ZEEL to financial investors, in order to repay loan obligations to certain lenders of the group for whose benefit such shares are currently encumbered (and who have consented to such share sale by the group)," Essel said in a statement. “Out of the aforesaid, the group seeks to sell about 2.3% stake in ZEEL to OFI Global China Fund, Llc and/or its affiliates," it said.
“Pursuant to the aforementioned transactions, the post-transaction overall holdings of the group in ZEEL will be about 5%, out of which encumbered holdings of the group will reduce to approximately 1.1% of ZEEL," according to the statement.
The Essel Group said the development reaffirms the “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 media/ non-media assets and remains confident to complete the same," it added.
In July, the Essel Group had said it would sell a 11% stake in ZEEL to US-based Invesco Oppenheimer Developing Markets Fund, an existing public shareholder in ZEEL, for ₹4,224 crore. Of this, 8.7% has already been sold to OFI Global China Fund, and a private investment vehicle Invesco, while the remaining 2.3% will also be divested soon. The balance 14.2% stake will be offloaded through off and on market sales, a spokesperson for ZEEL told Mint on Wednesday. The company expects to close the transaction within a week.
According to BSE data, at the end of September, the promoter group held a 22.37% in ZEEL. Of this, 96% was pledged. After the closure of the above transactions, Oppenheimer Developing Markets Fund and OFI Global China will together hold 18.74% in the company.
On 5 November, Mint reported that Chandra was in parleys with lenders to retain control of ZEEL as a clutch of asset managers, non-bank lenders and foreign portfolio investors, which had extended loans to Zee’s promoter group companies against share pledges, planned to put their pledged shares in an escrow account in preparation for a sale. The lenders had initiated discussions with potential bidders, including strategic investors, to sell the bulk of the pledged shares.
This is the second lot of lenders to initiate a process for sale of Chandra’s stake in ZEEL. Russian financial institution VTB Capital, a major lender to the group, has also kick-started the process of selling 10.71% in the media company. Promoters of Essel Group have a debt of around ₹11,000 crore. Essel Group companies—particularly those in roads and power—together owe an additional ₹11,400 crore, according to a 5 October Mint report.
Ahead of the news, shares of ZEEL surged amid a doubling of volumes, closing 7.49% higher at ₹307.15 on the BSE, widely outperforming a 0.45% gain in the benchmark Sensex index.