According to a report from the news agency Bloomberg on Thursday, Zee Entertainment Enterprises Ltd (ZEEL) has probably agreed to pay back dues owed to IndusInd Bank Ltd. in order to end the insolvency procedures that have been brought against it and move closer to concluding a merger with a Sony Group unit to establish a $10 billion media conglomerate.
According to the report, dues of over Rs 837 million may be paid as soon as this Friday, and the Mumbai-based bank has agreed to withdraw its insolvency case against the media company after the debt is repaid. According to Karan Taurani of Elara Capital, the NCLT merger approval might not come until after the cases have been settled or resolved at NCLT.
The Indian Performing Rights Society (IPRS) recently settled the companies’ claims after calling off their NCLT case. IPRS filed a petition with the NCLT’s insolvency tribunal against ZEEL in early January, alleging a default of Rs 211.41 crore. According to him, IDBI and IndusInd Bank both have outstanding claims totalling around Rs 150 crore.
“We believe expedition on the settlement will work favourably for the Zee-Sony merger as valuations are compelling in the range of 7-10x fwd PER for the merged entity (7x excluding Zee5 and Sony Liv losses),” Taurani stated.
The issue relates to a default of Rs 89 crore by Siti Networks, the multisystem operator arm of the Essel Group, which was claimed by IndusInd Bank and for which ZEEL was a guarantor. The insolvency proceedings against ZEEL were initially put on hold by the National Company Law Appellate Tribunal (NCLAT) earlier on February 24.
Punit Goenka, the managing director and chief executive of ZEEL, filed a petition, and the appellate tribunal granted it. It then sent letters to IndusInd Bank and the interim resolution professional, requesting a response within two weeks. IndusInd Bank’s plea to initiate insolvency proceedings was accepted by the Mumbai bench of the National Company Law Tribunal (NCLT) on February 22.
After suspending the board, it had also appointed an interim resolution professional. The NCLAT order provided ZEEL with a significant reprieve as it merges with rival, Culver Max Entertainment, formerly known as Sony Pictures Networks India, to establish the country’s largest media empire. The company has obtained the necessary shareholder, creditor, bourse, and CCI approvals, and is awaiting final approval from NCLT.