Mumbai: Mutual funds have started selling pledged shares of Zee Entertainment Enterprises (ZEE), rejecting the promoter’s plea for an extension of the repayment deadline. ZEE shares slumped 10 per cent on Monday to close at Rs 272 despite a stellar broader market rally as SBI Funds Management sold shares worth Rs 200 crore. Funds like ICICI Prudential and Kotak Asset Management are also believed to be on the verge of offloading the shares ahead of the repayment deadline of September 30.
When contacted, an Essel Group spokesperson confirmed the sale of ZEE shares by some of the lenders. “Essel Group confirms that the lenders, which had not agreed to grant the extension, have exited by selling the pledged shares of ZEEL. The other lenders that value the assets have agreed in principle to grant more time to the group,” he added. An email sent to Kotak, ICICI Prudential and SBI Funds Management did not elicit any response till the time of going to press.
Essel Group promoter Subhash Chandra met finance minister Nirmala Sitharaman on Monday to brief her on the developments. ZEE shares have fallen for six consecutive days, losing nearly 22 per cent since September 16.
The lenders to Essel Group, comprising mostly mutual funds and nonbanking finance companies, agreed in January this year to give the group time till September 30 this year to find a strategic or financial investor in ZEE and repay their loans worth nearly Rs 9,500 crore. Essel agreed to sell 11 per cent of promoters’ stake in ZEE to Invesco Oppenheimer in July and managed to repay Rs 4,200 crore.
Mutual fund officials said their debt now is worth Rs 2,300 crore. Essel Group sought extra time last month after it became clear it will not be able to conclude another deal by the end of the week.
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The debt crisis at the group worsened after the Delhi HC-appointed arbitrator asked the promoters not to sell or create third-party rights on their unpledged stake in ZEE till October 16. The order came in an ongoing dispute with Indiabulls Housing Finance over default in repayment of loans worth Rs 200 crore. After the Invesco Oppenheimer deal, promoters hold about 25 per cent in ZEE, of which 52 per cent is pledged. That stake is now worth Rs 6,533 crore.
