The resolution to approve Zee Media Corp.’s settlement with Diligent Media Corp., that involved writing off nearly Rs 127 crore from the Subhash Chandra-founded company, passed despite opposition from institutional investors.
In a postal ballot notice, Zee Media said Diligent Media’s total liability towards itself stood at around Rs 309.3 crore. It further added that the company, which is a related party through common control, has said it is unable to make the complete payment due to “financial distress”.
Accordingly, Zee Media said, a settlement agreement has been reached which entailed a transfer of Diligent Media’s trademarks, rights, titles and all intellectual property rights which include all references to news portal and primetime show brand DNA and a payment of Rs 12 crore as full and final settlement. Zee Media said the trademarks “will be of immense value to it, particularly for its popular and prime time show on its flagship channel and other properties”.
The agreement, citing a valuation report from an independent valuer, values Diligent Media’s trademarks at Rs 170 crore. This, in addition to the Rs 12 crore it will get, will result in a write-off of more than Rs 127 crore, a settlement which Zee Media’s audit committee and board of directors said is in the “best interest” of the company.
The resolution was passed, albeit with resistance from public institutional shareholders. Over 89% of shares owned by public institutions were voted on, and over 90% of the votes went against the resolution. But support from public non institutional shareholders helped the resolution pass. Being a related party transaction promoters had to abstain from voting.
Zee Media Shareholding
Promoter: 8.52% (all pledged)
- Institutions: 8.44%
- Non-Institutions: 83.04%
Three other resolutions passed with all round support from shareholders and the promoter.
– Alteration of Memorandum of Association
– Adoption of newly Substituted Articles of Association
– Issue of up to 13.50 crore convertible warrants to the promoter.
Zee Media is among India’s largest news networks with 14 news channels. It was founded by Subhash Chandra. Other companies in Chandra’s Essel Group have also been facing institutional shareholder unrest.
Earlier in the year, Zee Entertainment Enterprises Ltd.’s largest shareholder, Invesco Developing Markets Fund, sought to change the company’s board composition and oust Chief Executive Offer Punit Goenka. Goenka is Chandra’s son. The matter is now being litigated in court
At Dish TV Ltd., Chandra’s brother Jawahar Goel is the promoter. Yes Bank Ltd., the company’s largest shareholder, has sought a reconstitution of the board. That matter too has ended up in court Bloomberg Quint