Zee Entertainment Enterprises Ltd shares surged as much as 18.5% in early trade on Thursday, i.e. November 21, after Subhash Chandra-led Essel Group said it was planning to sell another 16.5% stake in the company to meet its loan repayment obligations.
Zee Entertainment shares touched an intra-day high of Rs 364 but later pared gains to trade at Rs 329.70, up 7.4% from its previous close. Data showed that almost 150 million shares of Zee Entertainment changed hands on NSE at an average price of Rs 304 apiece.
Essel Group, the promoter of Zee Entertainment, on Wednesday evening informed that the 16.5% stake will be sold to financial creditors. After the transaction, Essel’s holding in Zee Enterprises will come down to 5%, out of which encumbered holding will be 1.1%. Encumbered holdings are those which are owned by one entity, but subject to a legal claim by another.
The Essel Group also announced that of the 16.5% stake that is to be sold, 2.3% will go to OFI Global China Fund -- a subsidiary of Invesco Oppenheimer Developing Markets Fund -- which already holds 8.7% stake in Zee Entertainment.
Invesco Oppenheimer is one of the oldest investors of Zee and had in August agreed to buy out an additional 11% stake directly from its promoters for Rs 4,224 crore. Before that transaction, the fund held a 7.74% stake in the company as of June 2019.
Essel Group also said that it was working actively on further divestments including its non-media assets and remains confident to complete the same. Essel Group entities earlier held 22.37% in Zee Entertainment, of which over 90% is pledged as collaterals against finances availed by them through non-convertible debentures (NCDs).