As the Essel Group promoters try hard to repay their Rs 11,000 crore debt, the latest news doing the rounds is that Russia-headquartered VTB Capital has begun the process of selling its 10.74 per cent stake in Zee Entertainment. The Essel promoters are known to have pledged 10.74 per cent of their shares to VTB for a Rs 2,000 crore loan.
The promoter stake in Zee is currently at 22 per cent, which includes the 10.74 per cent stake, which they have pledged to VTB.
However, the Essel Group promoters have denied that VTB Capital has started looking for buyers. "None of the lenders are selling any shares and have extended complete support to the promoters of the group, enabling them to complete the disinvestment process in the most optimal manner. The group is in a steady dialogue with VTB Capital Plc to collectively arrive at the best resolution," says a senior spokesperson of Zee Entertainment.
At the beginning of the year, Zee promoters owned 42 per cent stake in the company, which has now come down to 12 per cent post the Rs 2,000 crore loan it took from VTB through pledge shares. "In the worst case scenario, I will dilute the Zee stake and meet the deadline. There is no question of me not meeting the deadline," Zee Entertainment MD, Punit Goenka had said in an earlier interview with Business Today in August this year, prior to the September 30 deadline of repayment of loan.
The company couldn't meet that deadline and has managed an additional six-month breather. Goenka, who had then sold 11 per cent of the promoter stake in Zee to Invesco Oppenheimer for Rs 4,224 crore, had said that if he wasn't able to get rid of the other group businesses, he was open to diluting another 10 per cent of the promoter's stake in Zee. "Whether I am at 42 per cent or 14 per cent (stake) doesn't make any difference. My objective is to build the 14 per cent value back to 42 per cent. Therefore, I have to do what is in the interest of the company," Goenka had said.
The company is known to have appointed an investment banker to lead the divestment process for its media and non-media business. It has been maintaining that neither VTB nor other lenders are selling any shares in isolation. If the promoters end up further diluting another 10 per cent of their stake in Zee Entertainment, then their stake will be reduced to less than 2 per cent, which could lead them to losing control in their flagship company.
Essel Group's debt currently stands at Rs 7,000 crore. "Our current debt is at Rs 7,000 crore, which includes the Rs 2,000 crore loan sought from VTB Capital," says the company spokesperson.
Apart from the deal with Oppenheimer, Essel Group has sold 205 MW operating solar assets of Essel Green Energy and Essel Infraprojects at Rs 1,300 crore to Adani Green Energy. "Essel Group promoters are also planning to divest their shareholding in Zee Learn, which is India's largest listed education company."