Essel Group: Subhash Chandra To Lose Control Of Flagship Zee Entertainment

In a second effort to raise funds to pay off debt, Subhash Chandra-led Essel Group, the promoter of Zee Entertainment Enterprises Ltd., will sell 16.5 percent shareholding in the media major to financial investors.

The divestments of promoter stake in its flagship company, as well as pending sale of some infrastructure assets, were prompted by large debt taken by Essel Group entities—a 2018 BloombergQuint investigation had estimated it at Rs 17,000 crore. The group had pledged shares of its listed companies in order to raise this debt.

Close to Rs 11,000 crore of this debt was owed to asset managers and non-bank financial companies. Essel Group repaid half the amount via the stake sale to Invesco Oppenheimer. As of the beginning of this month, total promoter debt obligation stood at Rs 7,000 crore, of which Rs 5,000 crore is owed to domestic lenders.

Depending on the final list of buyers and the shares they purchase in this second divestment, the promoter’s 5 percent stake in Zee will be the second-largest after Invesco’s over 18 percent.