Lenders await court verdict on Essel plea before selling Dish TV stake

A day after Indian lenders voted against reappointing a promoter nominee on Dish TV’s India board, banks said they are in advanced talks with Bharti group and Tata Sky to sell their stake in the satellite TV broadcaster.

Bank officials said they would wait for the outcome of a petition filed by Essel group promoter entities that have appealed against the transfer of pledged shares in lenders’ names. “Once the litigation is over, we would take the next steps to change the board of the company and sell our stake to the highest bidder,” said a source close to the development.

On Wednesday, Dish TV India shares were trading at Rs 15 a share to giving the company a total market valuation of Rs 2,800 crore. Either Bharti or Tata Sky acquiring Dish will consolidate the broadcaster’s market position. After the merger of Videocon d2h into Dish TV, the merged entity has a market share of 22.65 per cent amongst the DTH players as on September 31 last year. Tata Sky had a market share of 33.34 percent and Bharti Telemedia had a share of 26.11 per cent, as per Telecom Regulatory Authority of India (TRAI) data. Both Tata Sky and Bharti are keen to acquire the stake and have done their due diligence, said a source. The lenders jointly own 45 per cent stake in Dish TV.

Lenders are hoping to recover part of their dues from promoter entities of the Essel group by selling their stake in Dish TV. YES Bank had extended loans of Rs 5,270 crores to various Essel Group promoter entities between 2015 and 2018.  As security against the loans, the promoters had pledged 25.63 per cent of total shareholding of the company in favour of Yes Bank.  

After the promoter entities defaulted in repayment of loans, the security trustees invoked the pledge between May and July 2020 and shares were transferred in YES Bank’s name. YES and IndusInd Bank currently hold 24.78 per cent and 3.78 per cent of stakes respectively while promoter's stake fell to 6 per cent.

The promoter entities moved the Bombay High Court alleging that YBL’s shareholding in the company is bad in law and prayed for an ad-interim injunction restraining YBL from voting at the AGM of the Company which was scheduled on December 30, last year. The suit is currently pending.

Essel group patriarch, Subhahsh Chandra, in September 2020, filed a police complaint alleging fraud by YES Bank’s former management led by Rana Kapoor. Chandra alleged Kapoor forced him to take over Videocon D2H, a rival company, so as to bail out the promoters of Videocon group. The police decided to freeze the voting rights on YES Bank shares just before the AGM (annual general meeting) of the shareholders leading to a legal dispute between bank and Dish TV – with the matter landing in the Supreme Court.

The Supreme Court, in an interim order, had restored the voting rights of the bank in January this year.