Zee Entertainment Set to Repay IndusInd $10 mn; Lender May Withdraw Insolvency Case: Report

Zee Entertainment Enterprises Ltd (ZEEL) has likely agreed to repay dues owed to IndusInd Bank Ltd. as the company seeks to resolve insolvency proceedings initiated against it and inch closer to completing a merger with a Sony Group unit to create a $10 billion media giant, news agency Bloomberg reported on Thursday.

The settling of dues of about Rs. 83 crore ($10 million) to the lender could happen as early as Friday and the Mumbai-based bank has agreed to withdraw its insolvency proceedings against the media company once the repayment is made.

IndusInd Bank had approached the bankruptcy court in February, seeking to start insolvency proceedings against Zee, a move which could have threatened the merger by stopping all transactions, including asset transfers. The National Company Law Appellate Tribunal, halted the insolvency proceedings against the media company last month.

Karan Taurani of Elara Capital said that the NCLT merger approval may not come until the cases are resolved or settled in NCLT. The companies recently settled their claims with the Indian Performing Rights Society (IPRS) as the latter called off their case in NCLT. Earlier this January, IPRS moved the insolvency tribunal NCLT against ZEEL claiming a default of Rs 211.41 crore.

The outstanding claims by IDBI and Indusind Bank are in the range of Rs 150 crore each of the banks, he said.

“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 added.

The matter pertains to a default of Rs 89 crore by Essel Group’s multisystem operator arm Siti Networks claimed by IndusInd Bank, for which ZEEL was a guarantor.

Earlier on February 24, the National Company Law Appellate Tribunal (NCLAT) stayed the insolvency proceedings initiated against ZEEL.

Admitting a petition filed by ZEEL Managing Director and chief executive Punit Goenka, the appellate tribunal issued notices to private sector lender IndusInd Bank and the interim resolution professional directing them to file a reply in two weeks.

On February 22, the Mumbai bench of the National Company Law Tribunal (NCLT) had admitted a plea filed by IndusInd Bank to initiate insolvency proceedings.

It had also appointed an interim resolution professional after suspending the board.

The NCLAT order was a major reprieve for ZEEL, which is merging with rival Culver Max Entertainment, formerly known as Sony Pictures Networks India, creating India”s biggest media empire.

The company has received necessary approvals from shareholders, creditors, bourses and CCI and a final go-ahead from NCLT is awaited.

Zee Entertainment Enterprises shares are up over 7 per cent in today’s trading session.

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