In lenders’ interest: VTB Capital secures right to monetise 10.71% stake in Zee Entertainment

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Published: October 15, 2019 8:30:37 AM

“For the avoidance of doubt, VTBC would willingly cease all enforcement action and release the encumbrances upon repayment of the amounts outstanding under the facility. We are hoping to reach a satisfactory resolution with the obligors/promoters,” said a BSE filing.

VTB Capital, Essel Group, Zee Entertainment Enterprises,  ZEEL, Punit Goenka, Share price of Zee Entertainment Enterprises Ltd, BSEPunit Goenka, CEO, ZEEL, had earlier this month disclosed that over 90% of the promoter holding in the company was pledged.

VTB Capital, representing a clutch of lenders to the Essel Group, on Monday said that it had secured the right to potentially monetise the 10.71% stake in Zee Entertainment Enterprises. Last week, VTB Capital had disclosed that the said stake in Zee was pledged with it against a loan facility entered in September 2017. On Monday, VTB Capital said that it had enforced certain security rights granted to lenders in order to protect their interests in accordance with the terms of the financing arrangement.

“For the avoidance of doubt, VTBC would willingly cease all enforcement action and release the encumbrances upon repayment of the amounts outstanding under the facility. We are hoping to reach a satisfactory resolution with the obligors/promoters,” said a BSE filing.

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“The lenders will act in accordance with their contractual rights and in compliance with applicable law,” the BSE filing added. VTB Capital is the security agent on behalf of certain lenders namely VTB Bank (Europe) SE, LLC VTB Capital Holding IB and VTB Bank (Europe) SE.

Punit Goenka, CEO, ZEEL, had earlier this month disclosed that over 90% of the promoter holding in the company was pledged. The move by VTB is to protect the interests of the lenders, who will now be in a position to invoke the pledged shares if covenants are breached.

Fe had reported on October 6 that while some of the lenders to Essel Group in India may have agreed to a standstill, it was not clear whether VTB Capital has also agreed to a similar arrangement and nor was it clear if its covenants had been breached too. Commenting on the indirect pledge that VTB Capital had on its shares, Goenka had said the pledging was not a direct one. But with Sebi’s new norms on such disclosures, Goenka added that these disclosures were made. Interestingly, VTB Capital can invoke and sell shares in Zee Entertainment like some other lenders have done if its covenants are breached, even if maturity was a year away.

The current outstanding debt of the Essel Group is Rs 7,000 crore (loan against shares), while the value of the promoter group’s stake is valued at Rs 5,211 crore. Share price of Zee Entertainment Enterprises Ltd closed up 0.04% at Rs 242.55, on BSE, on Monday.

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