Zee Essel Group today said it has completed the sale of 8.7% of its crown jewel, Zee Entertainment Enterprises, to US-based Invesco Oppenheimer Developing Markets Fund as per a plan announced in July.
The remaining 2.3% stake that is to be transferred to the fund will also be sold in the “next few days”, the group led by Subhash Chandra said.
The move is part of efforts by the group to pay back debt of around Rs 17,000 cr.
The 11% stake being sold to the US fund will fetch around Rs 4,220 cr.
There have been rumors that the group has been trying to sell its DTH arm, Dish TV, with Bharti Airtel rumored to be one of the suitors.
“The Group is also working actively on further divestments including its non-media assets and remains confident to complete the same,” the group said today.
Shares in group entities, including Zee Media and Dish TV, had taken a beating after it came to light that some of the private firms of the promoter group focused on the real estate and infrastructure sector were finding it difficult to service their debt.
Group chairman Subhash Chandra also wrote an open letter to shareholders and other stakeholders explaining the situation. The infrastructure sector has seen a sudden drying up of funds after infrastructure financing firm IL&FS went to into default due to a mismatch between assets and liabilities.
Zee promoters had taken short term loans from various players, including mutual funds, and had found it difficult to keep the loans rolling amidst the turmoil caused by the IL&FS default.
Infrastructure and construction sectors in India tend to generate returns only after several years as the projects are typically of a long-term nature, and government clients tend to take a long time to approve bills and release funds.
As such, the sector depends on ready availability of low-cost funds to keep going, and any disruption to the finance sector threatens to freeze up activities in the sector.
Subhash Chandra, a member of India’s upper house Rajya Sabha, has repeatedly said his family will pay back the entire debt, even if they have to sell a controlling stake in flagship Zee Entertainment to another company or firm.
The group was initially discussing selling a controlling stake to any global media company. However, it decided to go for the current deal — which involves the sale of a non-controlling stake to a financial investor — as conditions have turned less dire in recent weeks.
Today’s “development reaffirms the Group’s positive progress on its overall asset divestment approach undertaken, to generate adequate liquidity for the repayment process,” the group said.
