Essel Group seeks time till March 2020 from mutual funds to clear dues

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Published: September 20, 2019 6:11:22 AM

In January this year, the Zee Entertainment Enterprises and Dish TV stocks fell sharply in the range of 26-33%, primarily on reports of pledged shares of promoters being invoked and sold.

Essel Group, mutual fund, clear due, industry news, zee media,  Zee Entertainment Enterprises, ZEEL, mutual fund, MFMost fund houses, experts say, have no choice but to agree to an extension since they cannot afford a systemic risk.

The Essel Group has sought a ‘few more months’ to pay off its dues to mutual funds (MFs), days after it made a partial partial payment of around Rs 2,000 crore. According to sources, most funds have agreed to wait till the end of 2019-20.  MFs have collectively given loans worth Rs 5,220 crore as in June 2019, against pledged shares, the data from Value Research showed. The Essel Group announced the successful completion of the first tranche of Zee Entertainment Enterprises (ZEEL) stake sale to Invesco Oppenheimer Developing Markets Fund. The group had entered into an agreement to sell up to 11% promoter stake in ZEEL to the Fund.

“The Essel Group has indicated it needs more time to clear the remaining dues. They have also informed us that they have some buyers and it will take some time for the sale,” a top fund said. Most fund houses, experts say, have no choice but to agree to an extension since they cannot afford a systemic risk.

In January this year, the Zee Entertainment Enterprises and Dish TV stocks fell sharply in the range of 26-33%, primarily on reports of pledged shares of promoters being invoked and sold. Several mutual funds had invested in the debt instruments of Essel’s infrastructure projects and are holding shares of Zee Entertainment and its subsidiaries as collateral. This resulted in security cover against exposures falling below the prescribed threshold as per the NCD documents. For several infra projects, the promoter has stood as guarantor and provided collateral in the form of shares. However, the promoters conveyed their inability to provide additional equity shares as most of their domestic shareholding was already pledged. Lenders had granted the Essel Group companies a moratorium till around September 2019 by which time fund houses expect the repayments.

“Essel Group is in constant dialogue with the consortium of lenders. The overall asset divestment approach is in steady progress and the group remains focused on the repayment process. All decisions taken in this process so far have been in the interest of the lenders and have only been implemented after their consent. The Group will continue to follow this approach with a sheer focus on repayment,” said an Essel Group spokesperson. He also added that the group wishes to confirm that the arbitration proceedings between Essel Group and Indiabulls Housing Finance do not have any bearing on the ongoing stake sale of ZEEL as shares being divested are pledged with the MFs/NBFCs/banks.

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