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

MUMBAI: The debt-ridden promoters of Zee Entertainment Enterprises (ZEE) have entered into agreements with clutch of financial investors to sell a total of 16.5 per cent stake in the company, two people with direct knowledge of the development confirmed to ET.

The stake sale is expected to take place in the next couple of days via block deals and may help promoters to recover Rs 5,000 crore, they said.

“Deals are almost done. ZEE promoters will sell 16.5 per cent in block deal and repay lenders. They will continue to hold 5 per cent in the entertainment company with Punit (Goenka) continuing as MD and CEO,” one of the persons said.

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.

Invesco Oppenheimer had earlier reached an agreement with ZEE promoters to buy 11 per cent stake for Rs 4,224 crore, out of which the promoters had completed sale of 8.7 per cent.

Subhash Chandra and family has to repay a total of over Rs 7,000 crore they owe to the 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 per cent stake. However, as the stock price fell, the promoters are now selling 15 per cent.

As of September 30, ZEE promoters are left with 22.37 per cent stake in ZEE, out of which 96 per cent is pledged with the lenders. VTB Capital has an encumbrance of over 10 crore shares, worth 10.71 per cent in the company.

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

In an earlier interaction Goenka had told ET that the promoters are willing to sell another 10-11 per cent in ZEE.

ET reported on Wednesday 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, Goenka had said that the promoters have recently been approached by some marquee investors to buy stake in Zee Learn, where the Essel Group owns 57.18 per cent stake. Apart from KidZee, the company also has a network of K-12 schools (Mount Litera) and Mahesh Tutorial.