Amid a public spat between Zee Entertainment Ltd (ZEEL) CEO and MD Punit Goenka and one of the company's biggest investors Invesco, the former, purportedly in his last "first and last" official communication on the matter, has asked some questions from Invesco.
"Why didn't Invesco make its plans public earlier? Does good corporate governance only apply to corporates and not their institutional investors?" Goenka asked. Goenka said as a law-abiding citizen and a representative of a responsible corporate citizen, he has complete faith in the judicial and regulatory system.
As per Goenka, it is not about one versus the other. "The shareholders and management of a company are two sides of the same coin. It is all about increasing the value of that coin together, for the betterment of all the shareholders and the company at large," he said.
Goenka -- who is the son of Zee's promoter Subhash Chandra -- also added that he wants a "better tomorrow for ZEE, one that is filled with higher returns". "Unfortunately, the way the current situation is unfolding is what disappoints me," he noted.
The Zee board, in a stock exchange filing on Tuesday, had said Invesco's actions over the past few weeks have been motivated by circumstances extraneous to the company's business or performance or the issues of corporate governance or public interest.
A note, presented to the company board by Goenka, said a deal was presented by Aroon Balani and Bhavtosh Vajpayee, the representatives of Invesco, to Punit Goenka in February 2021, which involved the merger of the company and certain entities owned by a large Indian group (Strategic Group). Upon completion of the aforesaid merger, the Strategic Group would have held a majority stake but the merging entities would have been "over-valued", resulting in loss to "stakeholders".
Invesco, in turn, refuted the allegations made by Goenka, saying they "simply defy logic." "We wish to make clear that the potential transaction proposed by Reliance (the "Strategic Group" referenced but not disclosed in the 12 October 2021 communication by Zee) was negotiated by and between Reliance and Mr Goenka and others associated with Zee's promoter family," Invesco said.
"The role of Invesco, as Zee's single largest shareholder, was to help facilitate that potential transaction and nothing more," it added. Currently, both the parties are engaged in a legal dispute over the matter of holding an extraordinary general meeting (EGM), for the removal of Goenka as MD and CEO, and the appointment of a new board.
Invesco which, along with OFI Global China Fund LLC, holds a 17.88 per cent stake in ZEEL, has been pressing for an EGM to discuss various issues, including the removal of Punit Goenka. Promoter Subhash Chandra's family presently hold around 4 per cent stake in Zee Entertainment Enterprises Ltd (ZEEL), and as per the merger announced with the Sony Picture Networks India, it can go up to 20 per cent. Goenka would also lead the merged entity as Managing Director for five years.
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