The beleaguered Essel group announced on 31st July that it would sell 11% stake in Zee Entertainment Enterprises Ltd. to Invesco Oppenheimer Developing Markets Fund. Due to this, Zee will be able to repay lenders well within the agreed timeline. The stake of the promoters has come down from 42% to 36% after the sale. Invesco will now hold around 19% in ZEEL.
Invesco will buy the stake of 11% in ZEEL from its promoters for a total consideration value of up to Rs. 4,224 crore. It has been a financial investor in ZEEL since 2002. Essel had initiated the process of divesting its key assets with the aim of repaying all the lenders by September 2019.
The debt of ZEEL is around Rs. 11,000 crore and it is believed that the current stake sale will take care of half the debt. Sale of non-media assets would also generate funds for repayment of debt.
Since Invesco has not demanded any seat on the Board of Directors, the promoters will be able to retain control. It may be recalled that ever since the ZEEL debt repayment issue became public some months back, it was being speculated that ZEEL would bring in a strategic global partner, but that doesn’t seem to be the case now.