NEW DELHI: After nearly eight months of uncertainty, debt-ridden Essel Group on Thursday said it has agreed to sell 11 per cent of promoters’ stake in Zee Entertainment Enterprises Ltd (ZEEL) to US-based Invesco Oppenheimer Developing Markets Fund for Rs 4,224 crore. The sale, part of Essel’s deleveraging process, will provide some relief to the group’s promoters who have pledged shares worth around Rs 11,000 crore with mutual funds and other financial institutions.
The group had arrived at a standstill agreement with creditors in February, under which the promoters gained eight months to repay debt. “... 11 per cent stake sale of ZEEL to the Fund is a strong step in the overall divestment process, giving the Promoters the required financial fillip to initiate the repayment process,” Essel said. The company has already announced that it will also sell non-media assets to meet its debt obligations.
The Subhash Chandra-led promoter group held 35.79 per cent in ZEEL as on June 2019, of which 63.98 per cent has been pledged. The Invesco Oppenheimer fund, meanwhile, already holds around 7.74 per cent in ZEEL and the deal will see this rise to 18.74 per cent.
While the group also had an offer from a consortium led by US media giant Comcast, analysts note that the deal with Invesco Oppenheimer is more advantageous to the promoters since it leaves them in control of the firm. “This deal is ideal for Essel promoters as they will continue to run the company and provide continuity for business – a critical thing for media businesses,” noted Abneesh Roy, EVP, Edelweiss Securities.