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Invesco Developing Markets Fund and OFI Global China Fund Llc, which own a combined 17.88% of Zee Entertainment Enterprises Ltd (ZEEL), have called a special shareholders’ meeting of the media company to remove Punit Goenka as director.

Goenka, son of Essel Group founder and chairman Subhash Chandra, is managing director and chief executive officer of ZEEL.

In a letter to the board of ZEEL, Invesco also sought the removal of two other directors Manish Chokhani and Ashok Kurien. Kurien partnered with Subhash Chandra to set up Zee, while Chokhani is director of investment firm Enam Holdings.

Board reshuffle
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Board reshuffle

The letter also proposed the appointment of six independent directors, including Surendra Singh Sirohi, Naina Krishna Murthy, Rohan Dhamija, Aruna Sharma, Srinivasa Rao Addepalli and Gaurav Mehta. While Surendra Singh Sirohi is a board member of HFCL Ltd, Naina Krishna Murthy is the founder and managing partner of law firm K Law. Dhamija is a managing partner for the Middle East and South Asia at Analysys Mason, and Sharma is a former IAS officer who retired as steel secretary to the government of India and is on the boards of Jindal Steel and Power and Welspun Enterprises, among others. Addepalli is the founder of Global Gyan and former chief strategy officer at Tata Communications. Mehta is an investment banker and India head of Raine, a telecom, media, and technology-focused investment bank.

Chokhani and Kurien have, however, submitted their resignations before the extraordinary general meeting (EGM). In a stock exchange filing on 13 September, Zee said the two have resigned as non-executive non-independent directors.

Chokhani, the company said, has resigned due to “changed life circumstances and perspectives post covid", while the reason cited for Kurien was his “preoccupation." Both tenures ended as of 13 September.

Subhash Chandra entered the infrastructure business and took massive loans with his family’s shares in Zee Entertainment as collateral. ZEEL was Chandra’s family jewel in the broadcasting business that ran more than 40 channels in 11 languages, the flagship being the Hindi general entertainment channels Zee.

Eventually, the Essel group accumulated a huge debt and Chandra, who held nearly 39% stake in Zee, pledged the majority of his shares with lenders.

“The company will take necessary action as per applicable law," a spokesperson for ZEEL said. In September 2019, Chandra and his son Punit Goenka had to repay about 11,000 crore in debt. The crisis had been aggravated by the collapse of shadow lender IL&FS that led to a credit freeze, Chandra had said then.

In an open letter this August, Chandra said that only 8.8% of his overall debt remains to be settled, with 91% of the dues being paid.

He, however, added that there’s a dispute with one lender and the issue is pending in court. “I am happy to report that we have come out of the financial stress situation by settling 91.2% of our total debt to 43 lenders in 110 accounts. 88.3% amount has been paid, while the remaining 2.9% is in the process of being paid. We are making all the required efforts to settle the remaining 8.8% of our total debt," Chandra wrote.

Referring to his first open letter dated January 2019, where he admitted to defaulting on payments to various lenders, he said it explained the ‘how’ and ‘why" behind the default.

“I had admitted the wrong decisions taken by me in the past, which caused the occurrence of the default due to the asset-liability mismatch. Goes without saying that it was an after-effect of the liquidity crisis, triggered from the IL&FS case," he said.

In June, Mint reported that media and entertainment company Viacom18 Media Pvt. Ltd and Chandra’s ZEEL were in talks for a potential merger that could create a large media firm with interests spanning broadcast, OTT, live entertainment and movie production.

The merger is proposed to be done through a share swap and is unlikely to involve any cash transaction.

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