No link with transactions alleged in media report: Zee to stock market

Zee Entertainment Enterprises Ltd (ZEEL) on Sunday clarified that it has no connection with any of the transactions said to have been carried out by its promoter Essel Group, as alleged in a media report a few days back.

In another release late on Sunday, the Essel Group said that its management has successfully arrived at an understanding with lenders to whom the shares held by the group's promoters have been pledged.

The media report, on Friday, said that the Essel Group was involved in money laundering immediately after the November 2016 demonetisation, following which the shares of the company's entertainment arm tanked over 30 per cent and the firm suffered market capitalisation loss of Rs 14,000 crore.

"At the outset, we wish to reiterate and confirm that Zee Entertainment Enterprises Ltd has no connection whatsoever with any alleged transaction(s) contained in the article published by a website," Zee said in a stock exchange filing.

"All the queries relating to demonetisation, if any, from the SFIO (Serious Fraud Investigation Office) were directed to Nityank (Infrapower and Multiventures Ltd) and that all the information/ documents relating to certain transactions sought by the SFIO were provided.

"Essel Group had already confirmed that Nityank Infrapower and Multiventures Ltd is an independent company and does not belong to Essel Group," it said.

"Since all information sought by the SFIO has been provided by Essel Group entities and no further information has been subsequently sought, the matter stands closed for Essel Group entities," it added.

The media report claimed that the SFIO was probing Nityank Infrapower for deposits of over Rs 3,000 crore made just after demonetisation was announced on November 8, 2016.

It also claimed that Nityak Infrapower and a group of alleged shell firms had carried out financial transactions that involved a few companies associated with the Subhash Chandra-led Essel Group between 2015 and 2017.

The filing also said that the Essel Group has filed a legal case against the media platform, "which has maliciously attempted to establish a linkage between the SFIO's investigation and Zee Entertainment Enterprises Ltd's promoters".

The media report also said that Nityank had also played a crucial role in a large business deal between the Videocon and Essel Group in November 2016.

Essel maintains that Nityank is an independent firm, while Videocon alleges otherwise.

In an "open letter" on Friday, Zee and Essel Group Chairman Subhash Chandra apologised to bankers, NBFCs and mutual funds for "not having lived up to their expectations" and being in debt due to the failure of multiple infrastructure projects, and said that he intended to pay back the loans through the sale of his promoter stake in ZEEL.

In the release late on Sunday, the Essel Group said it has arrived at an agreement with its lenders "which are having pledge on shares held by the promoters."

"In view of the sensitive situation triggered due to the steep fall of the stock price of ZEEL and Dish TV Ltd, a detailed meeting of the Essel Group promoters with the lending entities comprising mutual funds, NBFCs and banks was conducted," it said.

"In the meeting, the lenders further showcased their belief in the intrinsic value of Zee Entertainment and Dish TV, resulting in the following aspects: There will not be any event of default declared due to the steep fall in price.

"Lenders drew comfort from reiteration by the promoters for a speedy resolution through a strategic sale in a time-bound manner."

Commenting on the development, Essel Group Chairman Subhash Chandra said in a statement: "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."

Aditya Birla Sun Life CEO A. Balasubramanian said: "We have always believed in the intrinsic value of Zee Entertainment. I am very glad with the outcome of the meeting, which enabled us to arrive at a consensus, in the interest of all stakeholders."