Extending debt instrument maturity...

In January, MFS along with other lenders had entered into a ‘standstill’ agreement with Essel promoters where it was agreed that no ‘default’ will be declared on account of a steep fall in the price of Zee shares, which were pledged by the promoters as collateral. Also, the creditors decided to give time to the promoters till September 30 to settle the dues. This also extended the maturity of certain debt instruments till the end of September.

On Wednesday, Essel Group said its lenders had agreed to further extend the timeline beyond September-end, enabling the group to ‘optimise value output from the sale of its assets’.

Earlier this month, the group cleared part of its dues by transferring the proceeds from the promoters’ stake sale in Zee Entertainment. The payment halved the outstanding exposure of most MFS exposed to LAS structures of Essel Group firms.

The promoters had reached an agreement with Invesco Oppenheimer to sell up to an 11 per cent stake in Zee for ~4,224 crore.

While some MFS are believed to have sold the pledged shares of Zee to recover their dues, some fund houses have decided to give the Essel group promoters more time to pay up the remaining dues.

“We feel that promoters can realise the right value of their stake in Zee if they are given additional time. This would lead to better recovery for investors,” said a senior executive.

Overall, the MF industry had a ~5,000-~6,000 crore of debt exposure to Essel Group firms before the first tranche of dues were received.