Zee is set to repay IndusInd Bank $10 million to wrap Sony deal

Zee Entertainment Enterprises Ltd. has agreed to repay dues owed to IndusInd Bank Ltd. as the company seeks to resolve insolvency proceedings initiated against it and inch closer to completing a merger with a Sony Group unit to create a $10 billion media giant, according to Bloomberg.

The settling of dues of about Rs 83 crore ($10 million) to the lender could happen as early as Friday and the Mumbai-based bank has agreed to withdraw its insolvency proceedings against the media company once the repayment is made.

IndusInd Bank had approached the bankruptcy court in February, seeking to start insolvency proceedings against Zee, a move which could have threatened the merger by stopping all transactions, including asset transfers.

The National Company Law Appellate Tribunal, halted the insolvency proceedings against the media company last month.

Karan Taurani, Media and Entertainment sector analyst at Elara Capital said: "We believe expedition on the settlement will work favourably for the Zee and Sony merger as valuations are compelling in the range of 7-10x fwd PER for the merged entity (7x excluding zee5 and Sony liv losses)"

A lawyer representing Zee told NCLAT last month that the Sony deal had received all necessary approvals but would be stalled because of the initiation of corporate insolvency proceedings.

The merger, which has been in the making longer than the timelines originally indicated by Zee, has been approved by Zee’s shareholders and India’s antitrust regulator.

Zee Entertainment Enterprises shares are up 9 percent in today's trading session.

Deven Choksey, KRChoksey in an interaction with CNBC TV18 says "The valuations have come down. So the downside risk in the particular business has definitely come down. And as you were highlighting the merger is the key. The merger would probably build further amount of valuation possibilities going forward. Because largely the sports events, which would possibly take the shape out of this particular merger largely would result into better profits and profitability for the merged entity. So from that perspective, I totally agree with that point of view that corrected prices are probably better as far as entry into this particular business is concerned. And the downside risk is literally limited at this point of time."