Zee Entertainment Enterprises Ltd. filed an appeal in the National Company Law Appellate Tribunal (NCLAT) seeking relief after the Mumbai bench of the National Company Law Tribunal (NCLT) allowed the initiation of insolvency proceedings against the media company. This appeal comes a day after the NCLT ruling.
“All necessary steps are being taken as per law to protect the interests of all stake holders of Zee Entertainment and to achieve timely completion of the proposed merger with Culver Max Entertainment Pvt. Ltd (Sony),” as per a statement from the office of Punit Goenka.
Following this development, the stock recovered from the day’s low. At 3:15 pm, the stock was quoting at Rs 198.70 apiece on the NSE after hitting an intraday low of Rs 183.10. The stock saw its steepest intraday fall of over 13 percent after two years, on February 23.
NCLT has allowed insolvency proceedings on the company because of a petition filed by IndusInd Bank. Zee was the guarantor for IndusInd Bank’s Rs 150-crore loan to Essel Group’s Siti Networks, however, it failed to honour the Debt Service Reserve Account Guarantee Agreement (DSRA). The shortfall amounts to Rs 83 crore.
According to experts, the company had two options: move the NCLAT or pay the outstanding amounts. While the company has chosen the first option, the second option would not have had a significant impact on Zee’s financials. Foreign brokerage UBS had said earlier, “The amount is not material. It has already been provided for in Zee’s books and potential settlement will not affect the P&L.”