Zee Entertainment is disputing the bank’s claims in other proceedings filed by the bank and sees no financial implications from the same.
Buy / Sell Zee Entertain share
IDBI Bank, financial creditor to Zee Entertainment Enterprises Ltd. has filed a petition in the National Company Law Tribunal (NCLT) over a payment default of Rs 149.6 crore.
The lender has also sought initiation of corporate insolvency proceedings against the company.
IDBI Bank’s claims arise under a debt service agreement between the bank and the company for a financial facility availed by Siti Networks. Zee Entertainment is party to the Debt Service Reserve Account Guarantee Agreement.
Essel Media Ventures currently holds close to 5 percent stake in Siti Networks, according to the September quarter shareholding pattern.
This is not the first instance of the company being dragged to the NCLT over a default pertaining to Siti Networks. In February this year, IndusInd Bank had moved the Mumbai bench of the tribunal for a default of Rs 83 crore.
Zee Entertainment is disputing the bank’s claims in other proceedings filed by the bank and sees no financial implications from the same.
Brokerage firm Credit Suisse believes that size of the dispute is not material and hence is unlikely to meaningfully delay the merger approval process with Sony. The firm further added that while ad revenues may take a tad longer to pick up for Zee, legacy issues are unlikely to delay the merger.
Credit Suisse has an outperform rating on Zee Entertainment with a price target of Rs 300.
Shares of Zee Entertainment are down close to 20 percent so far this year.
