Mumbai, Jan 28 : The Zee Entertainment Enterprises Ltd (ZEEL) stock hit the circuit breaker on the BSE Sensex on Monday after Zee and Essel Group Chairman Subhash Chandra said that the company management has successfully arrived at an understanding with lenders to whom the shares held by the group’s promoters have been pledged.
The ZEEL stock on Monday gained 14.51 per cent at Rs 365.70 a share, up Rs 46.35 from its previous close on the BSE.
Zee said late on Sunday that it has reached an agreement with its lenders under which the latter will not declare a default owing to the steep fall in its share prices last week.
On Friday, after a media report said that the Zee promoter Essel Group was involved in money laundering in the aftermath of the November 2016 demonetisation, the shares of the company’s entertainment arm tanked over 30 per cent and the firm suffered a market capitalisation loss of Rs 14,000 crore.
In the release on Sunday, the Essel Group said it has arrived at an agreement with its lenders “which are having pledge on shares held by the promoters”.
“In view of the sensitive situation triggered due to the steep fall of the stock price of ZEEL and Dish TV Ltd, a detailed meeting of the Essel Group promoters with the lending entities comprising mutual funds, NBFCs and banks was conducted,” it said.
“In the meeting, the lenders further showcased their belief in the intrinsic value of Zee Entertainment and Dish TV, resulting in the following aspects: There will not be any event of default declared due to the steep fall in price.
“Lenders drew comfort from reiteration by the promoters for a speedy resolution through a strategic sale in a time-bound manner.”
In an “open letter” on Friday, Essel Group Chairman Subhash Chandra apologised to bankers, NBFCs and mutual funds for “not having lived up to their expectations” and being in debt due to the failure of multiple infrastructure projects, and said that he intended to pay back the loans through the sale of his promoter stake in ZEEL.
In a stock exchange filing on Sunday ZEEL clarified that it has no connection with any of the transactions said to have been carried out by its promoter Essel Group, as alleged in the media report.
The media report claimed that the SFIO was probing Nityank Infrapower for deposits of over Rs 3,000 crore made just after demonetisation was announced on November 8, 2016.
It also claimed that Nityak Infrapower and a group of alleged shell firms had carried out financial transactions that involved a few companies associated with the Subhash Chandra-led Essel Group between 2015 and 2017.