Zee crashes 10 per cent as lenders offload pledged shares

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Updated: September 24, 2019 6:50:24 AM

According to market sources, Kotak Mutual Fund and one other large fund house have sold shares of Zee Entertainment (ZEEL) that were pledged by the Essel Group.

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. 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.

Shares of Zee Entertainment Enterprises fell sharply on Monday to hit the lowest levels in over five years on reports that some lenders had sold a part of the company’s pledged shares in the open market. According to market sources, Kotak Mutual Fund and one other large fund house have sold shares of Zee Entertainment (ZEEL) that were pledged by the Essel Group.

An Essel Group spokesperson said: “The Essel Group confirms that the lenders who had not agreed to grant the extension have exited by selling the pledged shares of ZEEL. The other lenders who value the assets, have in-principally agreed to grant more time.”

Shares of ZEEL hit a 52-week low on Monday to close at Rs 272.10 —- down by 9.63% or Rs 29 on the BSE on Monday. An email sent to Kotak MF remained unanswered at the time of going to the press.

The bulk deal data from the NSE shows that ‘Catalyst Trusteeship Limited’ sold 72.5 lakh shares at an average price of Rs 281.75 per piece, amounting to around Rs 204 crore.

Last week, Essel Group had sought and extension for a ‘few more months’ to pay the remaining dues. According to the MF industry participants, most of the mutual funds have agreed to give time till end of the current financial year to Essel Group for the remaining payment. Several MFs had received payment of around Rs 2,000 crore from the Essel group on September 10.

The Essel Group recently announced the successful completion of the first tranche of 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.

Data from Value Research show that mutual funds collectively hold Rs 5,220 crore as on June 2019. Aditya Birla Sun Life AMC had received Rs 765 crore, HDFC AMC got Rs 580 crore, ICICI Prudential AMC and Kotak Mahindra AMC received Rs 434 crore and Rs 208 crore, respectively. Kotak had a total exposure of Rs 395 crore, of which Rs 208 crore was received a few days ago.

In January this year, share prices of ZEEL and Dish TV 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 when fund houses expect the repayments.

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