Sony Group Corporation’s Indian unit on Monday said it was disappointed with the Singapore arbitrator’s rejection of its emergency plea to stay proceedings at the National Company Law Tribunal (NCLT) for enforcement of the now-junked merger with Zee.
Terming the decision as a procedural ruling, the company said, “We will continue to vigorously arbitrate the matter in Singapore in front of a full SIAC tribunal and pursue SPNI’s (Sony Pictures Networks India’s) right to terminate the merger agreement and seek a termination fee and other remedies.”
On Sunday, the Singapore International Arbitration Centre (SIAC) denied interim relief to Culver Max Entertainment (Sony Pictures Networks India) and Bangla Entertainment, both Indian entities of Sony, saying it had no jurisdiction or authority to injunct Zee from approaching the NCLT to implement the merger scheme. “These are matters which fall within the statutory scheme and are for the NCLT to decide,” Zee had quoted from the emergency arbritator’s order dated February 4.
Sony had invoked arbitration proceedings against Zee when terminating the proposed $10-billion merger on January 22, citing non-fulfillment of closing conditions, and had slapped a $90-million (around Rs 750 crore) termination fee on the latter.
In response, Zee had moved the Mumbai bench of the NCLT against Sony to enforce the merger that had been approved by the tribunal in August last year. In its January 24 exchange filing, Zee had denied Sony’s claim of not meeting closing conditions of the proposed merger, adding that it had complied with all its obligations in good faith.
Zee had also termed the $90 million termination fee by Sony “legally untenable”, saying there was no basis to it. Zee shares were trading up 3.21% on the BSE on Monday at Rs 178.60 apiece. The proposed merger had hit a wall over leadership issues, with Sony pushing for its India MD & CEO NP Singh as the head of the merged entity, while Zee was asking for the merger scheme to be honoured.
The December 2021 merger agreement had Zee’s MD & CEO Punit Goenka as the face of the merged entity, which Sony had said could not be considered in view of the Securities and Exchange Board of India’sprobe against Goenka.
Ahead of the merger deadline on January 21, Essel group chairman, and Goenka’s father , Subhash Chandra had written to finance minister Nirmala Sitharaman, seeking the Centre’s intervention to safeguard the interest of Zee’s minority shareholders.
In media interviews last week, Chandra indicated that Zee’s promoter family, which held a 3.99% stake in the company, was looking to increase it by 5% as part of a longer-term plan to increase their holding to 26%.
Chandra had claimed that the promoter family would not take debt for the purpose, but would instead look to family members, including his younger son Amit Goenka, to increase shareholding.