50% of Essel promoters’ ZEEL stake up for grabs Chandra-led MFs ask Sebi to give more time to team in talks promoters to rope in investors with more than two investors

Promoters of Zee Entertainment Enterprises (ZEEL), the flagship firm of troubled Essel group, are open to sell over 50 per cent of their holdings in the firm as a part of their asset monetisation to repay debt, and are in talks with more than two investors for the same, a senior company official said.

Zee Entertainment Enterprises had announced in November last year that its promoters, led by Subhash Chandra, planned to sell up to 50 per cent of their equity stake in the company to a strategic partner.

"Our intent has not changed...but if somebody is making an offer (to buy) beyond the 50 per cent stake we will look at it," ZEEL MD and CEO Punit Goenka said in an analysts' call.

He was responding to a query on whether the promoters would be looking to sell a higher stake considering their holding has went down to 39.08 per cent following sale of 24.38 million pledged shares. As on December 31, 2018, promoters held 41.62 per cent stake in ZEEL.

Goenka, however, said, as part of the talks with the potential investors, the promoters had earlier indicated willingness to sell around 20 per cent of their holding.

Responding to another query on the number of potential buyers, Goenka said the figure of "at least two or more players" which he had put out in an earlier call with analysts "still holds".

Earlier this week, Essel group had sealed a formal agreement with its lenders to keep its companies afloat, under which it gets time till September to deleverage or pare its debt. Rs 13,500 crore is the loan against shares of all the listed companies of the promoters. Goenka said the group is working on multiple strategies; as and when which fructifies first, all of that equity realisation will go towards payment of this facility of Rs 13,500 crore.

While he did not give an exact timeline for concluding stake sale by the promoters, Goenka said, the company has set a March-April deadline for the sale.

Essel group's promoter entities sold shares worth over Rs NEW DELHI: Mutual fund houses with an estimated Rs 8,000-crore exposure to Essel Group have asked regulator Sebi to permit them to modify the framework of Subhash Chandra-led Group's debenture trust deeds to give promoters time to rope in strategic investors, officials said.

According to officials, several mutual fund houses have approached markets regulator Sebi asking it to revise the 'terms and conditions' of Essel Group's debenture trust deeds.

The move will give the promoters time to bring in a strategic investor rather than the selling pledged shares in case of decline in the prices of the security, they added.

The debenture trust deed is a document made by the company, whereby trustees are appointed to protect the interest of debenture-holders before they are offered for public subscription. Also, it specifies the equity cover that promoters need to maintain. When contacted, an Essel Group spokesperson said, "We do not comment on rumours". Fund houses are concerned that a potential default by the group's promoters may force them to mark down investments and erode their net asset value.

Mutual funds have a total exposure of about Rs 8,000 crore to Essel Group's debentures, against which shares have been pledged as collateral, at the end of December.

1,050 crore in six listed group firms in open market between January 25 and February 1, 2019, for paying off lenders who were not part of an agreement to prevent declaration of default on loans against pledged shares.

According to multiple regulatory filings by different promoter group entities of Essel group, shares of Zee Entertainment Enterprises, Dish TV, Zee Media Corporation, Siti Networks and Zee Learn were sold in open market.

Sources said the promoters sold the shares in order to pay off lenders who were not part of the pact announced on January 27, under which 97

per cent of the group's lenders agreed not to classify loans against pledged shares as "default".

On January 25, Essel group companies had come under massive selling pressure, plummeting up to 33 per cent, and suffered a combined erosion of Rs 13,352 crore in market valuation.

On January 26, Essel group Chairman Chandra said his company is in a financial mess and has blamed the same for the aggressive bets on infra, which has gone out of control since the IL&FS crisis and also the acquisition of Videocon's D2H business.