ZEEL falls 3% after Chandra barred from selling unpledged shares

Zee Entertainment Enterprises fell about 3 per cent intraday on Thursday as an arbitrator asked its promoters to not sell any unpledged shares. The stock was trading at Rs 325, down about Rs 10 on BSE.

A Delhi High Court-appointed arbitrator asked Essel Group chairman Subhash Chandra not to sell his unpledged stake in Zee Entertainment Enterprises (ZEE) till next month in an ongoing dispute with Indiabulls Housing Finance over default in repayment of loans worth Rs 200 crore.

The order exempts ZEE shares already pledged with non-banking finance companies and mutual funds but is likely to complicate matters for these lenders as they seek to recover their money.


Essel Group has certain claims against Indiabulls Housing Finance and likewise Indiabulls Housing Finance also has certain claims against Essel Group, said an Essel Group spokesperson.

Essel Group, the owners of Zee, have been trying to cut debt by selling its stake in the company. Earlier this month, the Essel Group transferred Rs 4,000 crore to lenders after selling 11 per cent of the promoter stake in Zee to Invesco-Oppenheimer. The group was also in discussions with other buyers to sell another 7-8% per cent stake and repay the lenders in full.

That process may get complicated now with the arbitrator’s order. The promoter stake in Zee is now reduced to 25 per cent after the deal with Invesco-Oppenheimer, of which 52 per cent is pledged.

The deal with mutual funds and other lenders stipulates that Essel repay all loans by the end of this month. Since the unpledged shares of Zee can’t be sold, Essel will have to work with prospective buyers and lenders on finding a solution that satisfies everybody.