The Subhash Chandra-led Essel Group will sell 16.5 per cent of its 22.37 per cent promoter stake in flagship firm Zee Entertainment (Zee), becoming a minority shareholder. However, the promoters will retain management control of Zee, the group said on Wednesday.
Zee kickstarted the cable and satellite revolution in the country and has been a leading Indian broadcaster for three decades.
The debt-ridden group on Wednesday said the share sale was being done to repay promoters’ loan obligations to “certain lenders”. Of the 22.37 per cent promoter stake in Zee, 96 per cent is pledged to lenders. The loan amount against the shares is Rs 7,000 crore.
Market sources said the transaction, to be executed via block deals, would be done at the price of Rs 277 per share, a discount of nearly 10 per cent to Wednesday’s closing price of Rs 307.15 on the BSE.
The deal size would be about Rs 4,200 crore. The promoters were expecting Rs 5,000 crore.
The block deals are likely to be executed over the next few days, sources said. The group has entered into agreements for this.
Essel Group indicated on Wednesday that OFI Global China Fund, a subsidiary of Invesco Oppenheimer, would pick up 2.3 per cent of the nearly 151 million shares being sold.
Invesco Oppenheimer had in August reached an agreement with ZEE to buy 11 per cent of the promoter stake for Rs 4,224 crore, of which sale of 8.7 per cent had been completed.
Besides mutual funds and other domestic lenders, Chandra and his family have to repay Russian financial services major VTB Capital from whom they had taken loans against shares for their privately-held ventures.
Of the 22.37 per cent promoter stake in Zee, 10.71 per cent is held by VTB Capital. The latter had indicated last month that it had received lender protection rights in Essel Media Ventures, a promoter group entity in Zee, whose shares were pledged to it.
The announcement by VTB Capital had paved the way for a likely sale of its pledged shares in Zee, prompting Punit Goenka, who was recently reappointed managing director and chief executive officer of the company, insisting in an analysts call that his firm was in “active dialogue” with the former.
On Wednesday, Essel Group said the pledge on promoter shares in Zee would reduce to 1.1 per cent after the block deals, with further divestment of non-media assets on the cards.