Zee Refuses Specifics On Utilising Rs 2,237-Crore Line From Promoters, Urges Investors For Positive Vote

While Zee Entertainment Ltd. claims that its Rs 2,237-crore fundraise will be directed towards funding new intellectual properties, live events verticals and business acquisitions, the media giant will not be providing specific and public schedules for mobilising the amount.

"Providing overly specific, public schedules for fund utilisation related to strategic acquisitions and scaling initiatives can compromise our competitive position and strategic flexibility," the company said.

Commenting on the overhang of promoters increasing stake through a warrants issue, Zee said, "The proposed increase in ownership to ~18.4% signals intent to share risk with fellow shareholders." The firm was replying to proxy advisory firm Institutional Investor Advisory Services.

It is to be noted that over 50% Zee shareholders had previously refused to vote for promoter-backed Punit Goenka's board seat, voting against his reappointment in November 2024. He is currently the chief executive officer at Zee.

"The promoter’s increase in shareholding will not only increase their skin in the game but also provide a long term anchor investor to the company providing stability to the cap-table," Zee told IiAS.

While the Zee promoters continue to remain without any board seat, a promoter-led funding would allow them to have the right to board representation.

It urged shareholders to vote for the fundraise resolution "in support of Zee Entertainment's continued growth and value creation."

However, IiAS reiterated its view, saying that it does not support a 15% dilution for building a war chest without specificity around use of proceeds.

To add some context, three proxy advisory firms—Stakeholders Empowerment Services, IiAS, and InGovern Research—have warned investors to vote against Zee's warrants issuance to promoters.

"Given the excessive dilution from the proposed warrants issue and the recent challenges faced by Zee, the increase in promoter holding through issue of warrants may not be in the best interest of the minority shareholders," InGovern wrote in a voting recommendation. "We recommend shareholders vote against the resolution."

It said that shareholders should seek enhanced disclosures from the Zee board as to how the funds will be utilised, with a project-wise breakdown.

Earlier this month, Zee Entertainment's board had approved plans to raise Rs 2,237 crore via the issue of fully convertible warrants to promotors.

These promoters are Altilis Technologies and Sunbright Mauritius, who currently hold no stake in the firm. Post the allotment of warrants, their shareholding will increase to 15%. This will take the overall promoter holding to 18.39% from 3.99% currently.

The company will issue up to 16.95 crore fully convertible warrants to the promoter group entities on a preferential basis, at Rs 132 per warrant. At the time of announcement, the warrant price was at 4.5% discount to the market price of the scrip.

Zee will receive Rs 560 crore immediately, with the remaining Rs 1,677 crore arriving over the next 18 months.

This move marked the first major investment since the failed Zee-Sony merger.

Separately, shareholders have also been asked to vote for appointment of two of the directors who approved this resolution.

IiAS and SES have recommended voting against this appointment of Saurav Adhikari and Divya Karani, citing governance issues and regulatory non-compliance.

The board appointed Adhikari and Karani as additional directors on Nov. 29, 2024 and Jan. 23, 2025, respectively. "The company is seeking shareholders’ approval on July 8, 2025 and more than three months have elapsed for both appointments," SES wrote, highlighting that this violated SEBI regulations for listed firms.

Adhikari and Karani were appointed without prior approval from the Ministry of Information and Broadcasting, which is required for media companies.

The two approvals from the ministry came only in April and May, 2025.

"MIB guidelines require prior approval, whereas these two directors have already assumed their role and have participated in board meetings," SES said, while also adding that they have also drawn remuneration for their participations.

The voting for approving the fundraise proposal starts on July 6 and closes on July 9, while the voting period for the appointment of Adhikari and Karani opened on June 9 and closes on July 8.

NDTV Profit has reached out to Zee Entertainment for comments on the story.