Dish TV shares rise on lenders’ move to change management
Shares of Dish TV zoomed 13 per cent on Tuesday, following reports that one of its lenders, YES Bank, had sent a notice to the company to remove the top management, along with its independent directors, after the company board decided to raise ~1,000 crore via a rights issue.
On Tuesday, Dish TV shares closed at ~15.54 a share, giving it a total market valuation of ~2,861 crore.
Although Indian lenders, who currently ownamajoritystakeintheloss-makingdish TV, are planning to overhaul the direct-tohome service provider's management, analysts say lenders have a slim chance of recovering their loans, given the dire financial metrics of the company.
The company made a loss of ~1,178 crore in 2020-21 (FY21) on revenues of ~3,249 crore.
Bankers said YES Bank's action is part of an effort to protect lenders' interests and for recovery of dues.
"This is an action driven by a private lender. Other lenders are not part of this action," said an executive with a mid-sized bank, adding, "We hope the company's value will be maintained on the basis of its performance as a going concern, by having a competent team or handing it over to those who know the business."
According to the annual report for FY21, Dish TV'S bankers include Axis Bank, ICICI Bank, IDBI Bank, and Standard Chartered Bank.
The debt of the company, however, came down as several banks decided to swap their debt for equity due to default.
On Monday, Dish TV informed the stock exchanges that YES Bank had decided to remove the management, along with independent directors, citing corporate governance concerns.
Dish TV is led by Jawahar Lal Goel, brother of Essel Group founder, Subhash Chandra. Essel Group is also undergoing a separate debt restructuring, where 91 per cent of lenders decided to settle the debt after taking a haircut.
Indian lenders, saddled with debt, are taking several companies to the National Company Law Tribunal for debt resolution. After a recent Supreme Court judgment, banks are also invoking personal guarantees of promoters. In the bankruptcy process, the average haircut of lenders is as high as 60 per cent.
Dish TV did not comment on the issue on Tuesday till the time of going to press.
In a communiqué, YES Bank has sought the removal of these directors, citing the present Dish TV board's decision to approve a rights issue process of ~1,000 crore, despite objections raised with it time and again, "solely to dilute the shareholding of the bank", which is its single largest shareholder.
The bank said the Dish TV board is not acting in line with good corporate governance standards and is not a fair representation of the incumbent significant shareholders of the company, being various banks and financial institutions holding about 45 per cent shareholding in it.
It said the "board is purportedly acting at the behest of certain minority shareholders holding merely 6 per cent of shares in the company".
It said this is reflected in the fact that even though the bank asked the board to desist from approving or conducting the proposed capital-raising exercise by way of a rights issue, without consulting the significant shareholders, it went ahead to make a press announcement on May 28, that it would proceed with a ~1,000-crore rights issue.
YES Bank notice says the board sidelined its multiple requests to reconstitute the boardbyappointmentofnomineedirectors, and that it acted in haste and took arbitrary decisions to proceed with the rights issue process. "The board has not acted on the legitimate request of the bank," it said.