The lenders to Zee Entertainment Enterprises (ZEE), the flagship firm of the beleaguered Essel Group, may have extended the September 30 deadline for clearing all outstanding debt, but the media company’s promoters are keen to service upcoming loan repayments much ahead of their due dates. According to ZEE’s managing director Punit Goenka, the idea is to ensure that the uncertainty surrounding the repayments doesn’t linger and affect the core business.
“The next due date [for domestic loans] is April 2020, and the last one is in June 2021,” Goenka told The Economic Times, referring to the separate deadlines for repaying lenders to which promoters have pledged their shares, adding that the company does not want to wait until then. “We want to sort out the problem within the next three months itself and get the whole thing resolved,” he explained.
Fund houses had entered into standstill agreements with ZEE’s promoters in January to not sell the pledged shares of the company after some Essel group companies defaulted on its repayments. The liquidation of ZEE’s shares of about Rs 200 crore by mutual funds resulted in a price drop of more than 30 percent in a single day.
Therefore, more than 40 lenders who had lent around Rs 13,000 crore to the Essel Group decided against selling their respective stakes at firesale prices. They gave the promoter group time till end-September to find a buyer for a portion of Subhash Chandra’s stake and clear debts. In a regulatory filing last week, the company said that its lenders had agreed to give it another six months to repay debt.
In the meantime, the Subhash Chandra-led Essel Group has been selling assets to meet debt obligations. The Group reportedly paid its lenders Rs 4,450 crore recently, following the ZEE’s stake sale to Invesco Oppenheimer Developing Markets Fund and divestment of 205 MW solar assets. “In January 2019, the total loan against shares and other securities was about Rs 13,500 crore,” said Goenka, adding that debt currently stands at Rs 7,000 crore. He also told the daily that the promoters are open to selling 10-11 percent stake to strategic investors. ZEE now has a market value of about Rs 22,750 crore.―Business Today