Restrain ZEE stake sale, YES urges HC
MUMBAI: Almost a year after promoters of Zee Entertainment Enterprises Ltd (ZEEL) sold an 11% stake in the company, YES Bank Ltd has moved the Bombay high court to restrain the controlling shareholders from selling more ZEEL stock and stopping managing director Punit Goenka from leaving India.
Essel group, which includes ZEEL, owes as much as ₹8,000 crore to YES Bank, which itself is in the middle of a complicated rescue plan.
According to the YES Bank petition, Essel group company Living Entertainment Ltd (LEL) borrowed $50 million from YES Bank in 2016 to buy shares in its unit, Veria International. Promoter Goenka had provided guarantees for the loan. Separately, LEL entered into a put option agreement with another group firm: ATL Media. Both are based in Mauritius. Under the put option, if the promoter stake in Zee fell below 30%, ATL must buy up to a 64.38% stake that LEL holds in Veria International, and also repay the loan. After this agreement was made, LEL assigned all its rights, titles and interest under the put option in favour of the trustee on behalf of YES Bank as additional guarantee for the $50 million loan, along with Goenka’s guarantee.
According to YES Bank, after the promoters sold an 11% stake in ZEEL to Invesco Oppenheimer Developing Markets Fund on July 31, 2019, their stake in ZEE fell below 30%, breaching the LEL-YES Bank loan agreement. But, when YES Bank invoked the put option, ATL declined to purchase the committed 64.38% stake in Veria and transfer $52.5 million to repay the loan.