Zee Entertainment Promoter To Infuse Over Rs 2,000 Crore — First Positive In Nearly 18 Months
This will take the total promoter shareholding to 18.39%, according to an exchange filing.
Zee Entertainment Enterprises Ltd.'s board has approved plans to raise funds via issue of fully convertible warrants to promotors. The firm will raise Rs 2,237 crore via the issue, it said.
During the first of the two meetings held on Monday, the board, alongside JPMorgan, discussed growth plans and strategic initiatives. Taking into account JPMorgan's suggestions, the board decided to enhance its promotor shareholding in the second meeting.
The company will issue up to 16,95,03,400 fully convertible warrants to the promoter group entities on a preferential basis, at Rs 132 per warrant. This will take the total promoter shareholding to 18.39%, according to an exchange filing.
The warrant price of Rs 132 apiece is at a 4.5% discount to the current market price. Zee will receive Rs 560 crore immediately, with the remaining Rs 1,677 crore arriving over the next 18 months.
This move marks the first major investment since the failed Zee-Sony merger, indicating strong "skin in the game".
The funds are earmarked to strengthen Zee's financial foundation, fortify core business segments, and explore new growth opportunities. This cash injection is also seen as crucial for mitigating potential contingent liabilities, including the ICC rights dispute with Jio-Star, and standing strong against competitors like RIL-Disney.
Zee's cash balance stands at Rs 2,400 crore. The move will also lead to an EPS dilution of 15-16%, making the trade-off between dilution and return on investment a key monitorable.
In July 2024, Zee's board had already approved raising Rs 2,000 crore via Foreign Currency Convertible Bonds.
Zee Stock Movement
Zee's stock has shown mixed performance. In the past month, it delivered a 7.56% return. It has advanced 12% year-to-date, but fallen 14% over the past year.
Out of 20 analysts tracking the firm on Bloomberg, 11 have a 'buy' call, four suggest 'hold', and five recommend 'sell'. The consensus among these analysts indicates a return potential of 6.2%.
