"We reject in full the assertions made by ZEE in its release on October 12. We specifically note that the implication that we as a shareholder would seek out a transaction for ZEE that is dilutive to the long-term interests of ordinary shareholders, including ourselves, simply defies logic,” Invesco said in a statement.
By Rajesh Kurup
The fight between Zee Entertainment Enterprises (ZEE) and its largest shareholder, Invesco Developing Markets Fund, continues unabated. A day after ZEE released a letter stating that Invesco had tried to pressurise its CEO and managing director, Punit Goenka into a deal with entities of a large Indian group, Invesco hit back saying that it was Goenka and the members of the promoter family who had negotiated a potential deal with Reliance Industries (RIL). ZEE had not named the large Indian group on Tuesday but Invesco named RIL on Wednesday. While refuting ZEE’s charges, Invesco also added that its role was that of a “facilitator”.
“We reject in full the assertions made by ZEE in its release on October 12. We specifically note that the implication that we as a shareholder would seek out a transaction for ZEE that is dilutive to the long-term interests of ordinary shareholders, including ourselves, simply defies logic,” Invesco said in a statement.
“The role of Invesco, as ZEE’s single-largest shareholder, was to help facilitate that potential transaction and nothing more.” It said that ZEE’s disclosure on Tuesday was “yet another tactic” to delay conducting an extraordinary general meeting (EGM).
On its part, RIL issued a statement stating, “We regret our being drawn into the dispute between ZEE and Invesco. The reports in the media are not accurate”. It added that that in February/ March 2021, Invesco assisted Reliance in arranging discussions directly “between our representatives and Punit Goenka, member of the founder family and managing director of ZEE”.
In its statement, RIL said, “We had made a broad proposal for merger of our media properties with ZEE at fair valuations of ZEE and all our properties. The valuations of Zee and our properties were arrived at based on the same parameters. The proposal sought to harness the strengths of all the merging entities and would have helped to create substantial value for all, including the shareholders of ZEE”.
The company said that it always endeavours to continue with the existing management of the investee companies and reward them for their performance. Accordingly, the proposal included continuation of Goenka as managing director and issue of ESOPs to management, including Goenka.
“However, differences arose between Goenka and Invesco with respect to a requirement of the founding family for increasing their stake by subscribing to preferential warrants. The investors seemed to be of the view that the founders could always increase their stake through market purchases,” RIL said. It added, “At Reliance, we respect all founders and have never resorted to any hostile transactions. So, we did not proceed further”.
The fight between ZEE and Invesco started since September 11 when the latter sent a requisition notice to ZEE, asking it to convene an EGM and evict Goenka and two other directors, and induct six new directors of its choice.
“The recent interest of Sony, as well as the previous interest of Reliance, should be a reminder to all ZEE shareholders of the enormous value that lies in this company, much in contrast to its dismal performance under the current leadership and board over the last few years,” Invesco said.
Invesco (formerly Invesco Oppenheimer Developing Markets Fund) – which together with its subsidiary OFI Global China Fund holds a 17.88% stake in ZEEL – also said it made “sincere efforts” over the last two years to bring ZEE back to good health.
ZEE had filed a suit in Bombay High Court to declare Invesco’s EGM notice as “invalid”, which came up for hearing on Wednesday and has been adjourned to October 21.