Zee Entertainment shares zoom 12% but other group firms' erode further1 min read . Updated: 28 Jan 2019, 02:16 PM IST
- Essel group reached an agreement with lenders that they would not sell the group companies’ shares pledged by the promoters.
- Essel group was also agreed to not classify the loans to the group as non-performing assets.
Shares of the beleaguered Zee group companies moved in different directions after conflicting reports emerged on the outcome of Sunday’s meeting between the promoters and the lenders. Shares of Zee Entertainment Enterprises, the flagship company of the group, were up 12% in today’s trade so far as investors seemed to believe the promoters’ commentary that they were focused on repaying their debts and stayed committed to the business.
In a statement issued late Sunday evening, the Subhash Chandra-promoted Essel group, the controlling shareholder of Zee companies, said it had reached an agreement with lenders that they would not sell the group companies’ shares pledged by the promoters with them. It was also agreed to not classify the loans to the group as non-performing assets (NPAs).
Contradicting this was a news report that said not all lenders were on board with going soft on the group. A report in The Economic Times said the group had managed to secure a three-month reprieve.
More than half the promoter stake of Zee Enterprises is pledged. The promoters held 41.62% stake in the company as on December 31, 2018. Zee promoters will try their best to prevent any further run on the Zee Enterprises shares as they look for a buyer for half of their stake in the company. Continued erosion of the value could prompt the lenders to dump the shares pledged with them and thus also end up hurting the promoters’ attempt to sell the stake.
But the promoters’ assurances didn’t seem to have been able to persuade the investors in other group companies. Zee Learn and Zee Media Corporation fell 9% and 18%, respectively, their second consecutive day of mauling.
Zee Learn is the educational arm of the group which operates K-12 schools (Mount Litera Zee school and Kidzee) while Zee Media operates its news broadcast (Zee News) and newspaper (DNA) businesses. Dish TV was up a mere 2%.
Zee Entertainment had lost almost a third of its valuation Friday, finally closing 27% lower, whereas Dish TV did indeed end 33% down that day. Zee Learn had closed 19% down and Zee Media 9% lower from Thursday’s levels.
Friday’s run of the Zee group shares had come after a report Thursday in The Wire linked firms belonging to Chandra to large deposits made after demonetization. Zee has vehemently denied the allegations in The Wire story.