Zee Entertainment’s Punit Goenka moves NCLAT against insolvency order

The Mumbai bench of NCLT on Wednesday allowed initiation of insolvency proceedings against zee entertainment,

This will likely delay the merger with the local unit of Japan’s Sony Group Corp. The Indian unit of Zee and Sony is looking to merge their television channels, film properties and streaming platforms to take on the likes of Netflix and Disney in India.

Punit Goenka, CEO, Zee Entertainment Enterprises, said that all necessary steps as per law are being taken to protect the interest of all stakeholders of Zee Entertainment and for timely completion of the proposed merger with Culver Max Entertainment Pvt Ltd. Limited

IndusInd Bank’s argument

bankruptcy proceedings This came after IndusInd Bank Ltd filed a petition against Zee with the National Company Law Tribunal over a default 83.08 cr.

Zee had provided commitments for financing the shortfall in the debt service reserve account for Citi Networks, which had taken loans from various banks, multiple exchange filings show.

Both Citi and Zee are part of the Essel Group.

Elara Capital analyst Karan Taurani said in a note that the nature of the pending financial matters will only delay the merger process with Sony, which is a big turnoff for Zee’s stock and its valuation multiples.

In a worst-case scenario, the Zee management may settle the claims to expedite the merger process. But that seems unlikely right now, Taurani said.

Zee informed the exchanges in December that IDBI Bank had filed an application as part of insolvency proceedings against the company over default of Rs 1.5 billion on loans taken by Citi.

Shares of Zee Entertainment Enterprises Ltd today hit a 17-month low after the company entered insolvency proceedings. Shares of Zee, which have fallen nearly 22% so far in 2023, fell as much as 14.4% before paring some losses. They were last down 9.2%.