In a bid to allay market fears, the Subhash Chandra-led Essel Group late on Sunday said it has "arrived at an understanding" with its lenders to ensure that it is not declared a defaulter in the event of Zee group stocks taking a further beating on the bourses.
In a statement, the Essel Group, which holds controlling stake in Zee group companies, said its lenders have "showcased their belief" in the group firms Zee Entertainment Enterprises (ZEEL) and Dish TV. "As a result…there will be synergy and co-operation, amongst lenders leading to a unified approach. Lenders drew comfort from reiteration by the promoters for a speedy resolution through a strategic sale in a time bound manner."
It said the promoters of the Essel Group had a detailed meeting with the lending entities comprising mutual funds, non-banking financial companies (NBFCs) and banks, in which it was decided that there would not be any event of "default declared due to the steep fall in price (of shares)."
The market was anticipating the Zee group shares to come under further pressure from Monday, as the margin thresholds for pledged shares of promoters have come down after the share prices of group companies crashed on Friday.
An analysis of the shareholding patterns of companies in the Subash Chandra-led group, like Zee Entertainment Enterprises (ZEEL), Dish TV, Zee Media and Zee Learn, shows that a large chuck of promoter holdings are pledged with lenders.
In the case of group flagship ZEEL, as much as 59.37 per cent of the promoter holding is pledged. The pledging level is still higher in smaller group companies like Dish TV (82.05 per cent), Zee Learn (95.45 per cent) and Zee Media (73.38 per cent).
Shares of Zee group companies came under massive selling pressure on Friday, plummeting up to 33 per cent, which led to a combined erosion of Rs 13,500 crore of market capitalisation. Dish TV shares crashed 32.74 per cent to close at Rs 22.60 on the BSE, while shares of ZEEL plunged 26.43 per cent to Rs 319.35, Zee Learn tumbled 18.49 per cent to Rs 27.55 and Zee Media Corporation slumped 9.05 per cent to end at Rs 22.10.
According to analysts, the high ratio of ‘pledge on shares’ by the promoters could put further pressure on Zee group counters as lenders would ask for topping up the margins. If it is not done, shares would be dumped by the lenders without delay.
Sources said some of the lenders had sold shares in the market on Friday, adding to the sharp fall in share prices of the group companies.
Commenting on the arrangement with lenders, Essel Group chairman Subhash Chandra said, "I am pleased to share that we have achieved an understanding with lenders. We have always valued their immense trust and faith shown in us and the positive and progressive outcome of the meeting, is a true example of the same. I am very positive, that we will continue to take such positive steps in rising up from the current challenging times, with support of all stakeholders."
The selling in the Zee group stocks emerged after a report said its controlling shareholder Essel Group’s name emerged in a probe linked to large deposits made after demonetisation.