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ZEE promoters to sell 16.5% stake to financial investors via block deal

Zee Entertainment promoters are expecting to recover Rs 5,000 crore from the deals.

, ETMarkets.com|
Updated: Nov 20, 2019, 08.56 PM IST
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Other source added that Invesco Oppenheimer Developing Markets Fund’s subsidiary OFI Global China Fund will pick up 2.3 per cent stake out of the 16.5 per cent.
MUMBAI: The promoters of Zee Entertainment Enterprises (ZEE) are looking to sell up to 16.5% more of their stake in India’s biggest listed media company to repay lenders.

Of the total promoter stake earmarked for the sale, up to 15.72% will change hands in block deals on Thursday.

According to a term sheet seen by ET, three promoter companies - EMVL, Cyquator and Essel Corporate - will sell 77 million, 61 million and 11 million shares, respectively, totalling 15.72% of the equity base. The stake will be sold at an indicative price of Rs 277 per share, translating into a 10% discount to Wednesday’s closing price of ZEE at Rs 307 apiece, the term sheet document showed.

At the floor price, the value of the 15.72% stake is worth $582 million (nearly Rs 4,132 crore).

Citigroup is the book runner for Thursday’s proposed block deals.

In a separate filing with the stock exchanges, ZEE promoters said that out of the planned sale of up to 16.5% equity, the promoters are seeking to sell around 2.3% stake in ZEE to OFI Global China Fund, a subsidiary of the Invesco Oppenheimer Developing Markets Fund that had earlier bought into the Mumbai-based media company.

On July 30, ZEE’s promoters had reached an agreement with Invesco Oppenheimer to sell up to 11% stake for Rs 4,224 crore (Rs 400 per share): In this transaction, the promoters had completed the sale of 8.7%.

Separately, banking sources told ET that some foreign institutional investors (FIIs) have already committed their participation in the block deals.

“These deals are almost done. ZEE promoters will sell 15.72% via block deals and the remaining will be sold off-market. They will continue to hold 5% in the company, with Punit (Goenka) continuing as MD and CEO,” a highly placed source told ET.

Promoter Subhash Chandra and his family office have to repay more than Rs 7,000 crore they owe to domestic lenders, including mutual funds, and Russia’s state-backed lender VTB.

ET had earlier reported that ZEE promoters were talking to three FIIs to sell 10-11% stake. However, as the stock price fell, the promoters now have to sell more stake in the company.

As of September 30, ZEE promoters owned 22.37% stake in ZEE, out of which 96% is pledged with the lenders. VTB Capital has a charge of more than 100 million shares, worth 10.71% of the company’s equity.

After the next round of sale, ZEE promoters will continue to own 5% stake in the company, out of which around 1.1% will remain pledged, the company said.

A ZEE spokesperson had earlier said that Essel Group has appointed investment bankers to lead the divestment process of media and non-media assets, and that the group is also in a “constant process of evaluating proposals from the prospective partners,” keeping the interest of its lenders.

ET reported on Tuesday that private equity firm KKR-backed EuroKids is in preliminary talks to acquire preschool chain KidZee from Zee Learn for Rs 1,000–1,200 crore. Earlier, in an investor call, CEO Goenka had said that the promoters have recently been approached by some marquee investors to buy a stake in Zee Learn, where the Essel Group owns 57.18% stake.

Apart from KidZee, the company also owns a network of K-12 schools (Mount Litera) and Mahesh Tutorial.

Also Read

VTB decides to sell pledged shares of Zee promoters

Lenders harden stance on Zee promoter stake sale

Zee promoters to sell 11% to Invesco Oppenheimer

Zee promoters raise over Rs 4,500 cr via stake sale

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