The Essel group is expected to repay Rs 2,600 crore to mutual funds this week. The development comes days after Subhash Chandra's Essel Group raised Rs 4,224 crore by selling 11 per cent stake in Zee Entertainment Enterprises Ltd (ZEEL) to Invesco Oppenheimer. These six mutual funds will receive their first tranche of payment this week, reported The Economic Times. But, the troubles don't seem to end for the media baron-led group anytime soon. While six mutual funds have a total exposure of Rs 6,300 crore to the group, the Essel group needs to pay another instalment of Rs 3,700 crore to them by September. Since funds were borrowed by keeping company shares as collateral, the failure to repay before the September-30 deadline could force them to sell these shares to recover dues. As per the report, the non-banking finance companies could get around Rs 1,100 crore out of the total proceeds of the Zee-Invesco deal.
The Essel group comprises the listed ZEEL and Dish TV besides unlisted entities including Sprit Infrapower and Multiventures, Essel Lucknow Raebareli Toll Roads, Essel Infraprojects, ARM Infra and Utilities, Asian Satellite Broadcast and Edisons Infrapower besides others.
As per the agreement between Essel group and these mutual funds, they can't sell shares held as collateral till September 30, which had affected their fixed maturity plans payouts. The mutual funds that failed to repay fixed mutuality plans include Kotak Mahindra AMC and HDFC AMC. In April, when some fixed maturity plans (FMPs) schemes of Kotak and HDFC mutual funds came up for maturity, HDFC AMC had rolled over one of its FMP by 380 days, while Kotak Mutual Fund repaid investors minus their holdings in Essel Group companies.
Subsequently, in a bid to allay investor doubts that they might not get back their entire investments in case the Essel group defaults on payments, HDFC AMC decided to provide a Rs 500 crore "liquidity arrangement" to certain FMP schemes of HDFC Mutual Fund with exposure to the Non-Convertible Debentures (NCDs) issued by Edisons Infrapower and Sprit Infrapower.
The group has exposure worth Rs 2,500 crore in Birla AMC; Rs 800 crore in HDFC AMC; Rs 300 crore in Franklin Templeton; Rs 800 crore in ICICI Prudential; Rs 370 crore in SBI; and Rs 410 crore in Kotak AMC, reported the daily. To repay a part of the debt, the Essel group is expected to make payment worth Rs 2,568 crore this week.
Ahead of the ZEEL stake sale, the Essel promoters had also divested a few road and power projects. For instance, Essel Infrastructure, which has debts to the tune of Rs 11,400 crore, had sold three of its road projects in MP, Karnataka and Telangana for around Rs 3,500 crore. The Essel group is also known to have sold its power assets to Edelweiss for Rs 2,500 crore, while PE giant Blackstone snapped up Essel Propack in a Rs 2,157-crore deal in April.
Edited by Manoj Sharma