Zee Entertainment’s promoters Essel Group seek to sell 16.5 percent stake to financial investors to raise around Rs 5,000 crore to repay loan obligations. This confirms
CNBC-TV18’s news break on November 11, 2019. Essel Group has launched the process to sell 15 crore Zee shares at a floor price of Rs 277/share which is at a 9.8 percent discount to the last closing price of Rs 307/share to raise at least Rs 4,182 crore.
The total share sale of 16.5 percent includes 2.3 percent to existing investor Invesco Oppenheimer which was pending from the last transaction of 11 percent stake sale. Share sale proceeds will be used to repay VTB Capital, domestic lenders like Birla MF, HDFC PMS.
Post this process the
Essel Group will retain a 5 percent stake in the company. Punit Goenka is likely to continue as the MD & CEO of the company. Essel Group’s encumbered holdings will reduce to 1.1 percent in ZEEL post this deal from the current 10.71 percent on account of loan taken from VTB Capital. VTB Capital, Mutual Funds and other lenders have transferred their shares in an escrow account for the sale process.
Zee CEO and MD Puneet Goenka in a letter to employees said the sale is "in line with our overall asset divestment approach and most above, adhering to our repayment commitments to all our esteemed lenders".
Essel Group had earlier announced a share sale of 11 percent to existing investor Invesco Oppenheimer at Rs 400/share to raise Rs 4224 cr. Of this 8.7 percent stake has been sold, part of the remaining sale of 2.3 percent will be completed in this round of share sale. With this, Invesco Oppenheimer will own a total of 18 percent stake in Zee Entertainment and continue to be the single largest shareholder of the media giant.
Sources shared on the condition of anonymity that the single largest shareholder Oppenheimer funds are backing the current management for continuity of future performance of Zee Ent. Sources also add that due to the lack of any strategic sale of Zee Ent, Essel Group with minority shareholding may continue to run the business. Zee Ent board had recently re-appointed Punit Goenka as the MD & CEO of the company, this will have to be approved by the shareholders.
Essel Group recently concluded roadshows with investment banks Citi & JPMorgan to build a book for the sale of shares. “Investors are betting on the returns after the overhang of shares against loan lifts and fundamentals of the business start reflecting in the stock” an expert with direct knowledge of the development shared with CNBC-TV18.
The total promoter holding in Zee had come down to 22.37 percent at the end of September, of which 96 percent was pledged with lenders. VTB Capital had 10.71 percent encumbered shares in Zee, promoters had pledged the remaining 10.77 percent to a clutch of domestic NBFCs, MFs and banks with a total obligation of Rs 7000 crores.
Essel Group in a press statement said, “This development reaffirms the Group's 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.”While this is likely to resolve the loan against shares for Zee Entertainment, Essel Group is taking other steps to divest assets to raise funds and repay remaining group debt.