Mumbai, India – Zee Entertainment Enterprises Ltd (ZEEL) has written to the Securities and Exchange Board of India (SEBI) expressing its apprehension that the “continuous and repetitive” investigations being conducted by SEBI could potentially impact its merger with Sony Pictures Networks India Pvt Ltd (Sony). Zee has already obtained a No Objection Certificate (NOC) from SEBI for the merger process.
Recently, SEBI barred ZEEL’s Subhash Chandra and Punit Goenka from holding any directorial or key managerial position in listed companies or their subsidiaries. Following this development, Zee has reached out to SEBI, highlighting its concerns regarding the impact these ongoing investigations might have on its merger plans with Sony.
In a letter to SEBI, Zee stated, “Please note that the said merger is at an advanced stage post receipt of approvals from various regulators (including SEBI, Stock Exchanges, and CCI, etc.), and the scheme is also approved by 99.9 percent of the equity shareholders of ZEEL.” The company emphasized that the transactions under investigation relate to the year 2019 and that it has already provided a detailed explanation to the Stock Exchanges and SEBI. Zee further questioned the need for re-investigating or re-examining the matter, considering that the cause of action is nearly four years old.
Zee clarified that it was not privy to the loan arrangements between Borrower Entities and Yes Bank or the loan amount involved. The misappropriation of ZEEL’s fixed deposit was the result of unilateral action taken by Yes Bank without any involvement on the part of ZEEL, making the company a victim of Yes Bank’s misappropriation.
Zee emphasized that it has taken all necessary steps to ensure the recovery of the misappropriated funds, acting in the best interest of its shareholders. The company aims to safeguard shareholder interests and avoid any losses resulting from the misappropriation.
Industry experts have pointed out that SEBI’s decision to bar Subhash Chandra and Punit Goenka may potentially affect the proposed mega-merger between Zee and Sony. However, investment bankers familiar with the matter have indicated that the issues surrounding this investigation would have been addressed during the merger discussions.
SEBI’s action to bar Chandra and Goenka stemmed from a probe into allegations regarding the appropriation of certain fixed deposits of ZEEL by Yes Bank to square off loans of related entities of the Essel Group.
SEBI’s order stated that Chandra, the former chairman of ZEEL/Essel Group, had provided a “Letter of Comfort” (LoC) for credit facilities availed by certain group companies from Yes Bank. The existence of the LoC was known only to a few individuals in the management, and even the ZEEL board was unaware of its existence, according to SEBI.
SEBI’s order further asserted, “…facts make out a prima facie case of Mr. Subhash Chandra and Mr. Punit Goenka having abused their position as directors/KMPs of a listed company for siphoning off funds for their own benefit.”
While the investigations continue, Zee and Sony remain committed to completing their merger plans, which have received widespread support from regulators and shareholders. It remains to be seen how these ongoing investigations will impact the future of the merger between the two media giants.
Sources By Agencies