Zee Entertainment zooms 14% in 4 days on hopes of settlement with lenders

Shares Zee Entertainment Enterprises (ZEE) rose 4 per cent to Rs 214.70 on the BSE in Tuesday’s intra-day trade on hopes of settlement with lenders.

The stock of the TV broadcasting & software production company was trading higher for the fourth straight day, surging 14 per cent during the period. According to media reports dated March 16, the company has agreed to pay dues to IndusInd Bank. Besides, the lender has likely agreed to withdraw the insolvency case.

"ZEEL has agreed to repay dues owed to IndusInd Bank 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," a Bloomberg report said. CLICK HERE FOR FULL REPORT

Clarifying on the news report, ZEE said that the company has been exploring several strategies, including settlement, in relation to the ongoing dispute mentioned in the news report.

However, there is no clarity at this stage as to which resolution or strategy the company will finally pursue, much less the timing of any such strategy. Accordingly, we believe that the news report is speculative in nature, the company said.

IndusInd Bank had approached the bankruptcy code in February to initiate insolvency proceedings against ZEEL. The National Company Law Appellate Tribunal (NCLAT) later provided interim relief to the company by putting a stay on the proceedings. The next hearing will be held on March 29.

Meanwhile, earlier this month, all disputes/claims (Rs 210 crore) between the Indian Performing Right Society (IPRS) and ZEE had been settled, and IPRS has agreed to withdraw the insolvency petition (IP). No penalty is to be paid, and it shall not have material impact on ZEE’s financial position.

"This shows ZEE’s clear intent to quickly settle pending issues for its merger with Sony. Sony’s CFO recently said that the merger is largely complementary because Sony India has strengths in general entertainment and sports while ZEE has strengths in entertainment in local languages", said analysts at Nuvama Wealth Management.

ZEE5 is positioned to reap the benefits of a likely easing in competition from global OTTs (content costs likely to be cut in FY24). High losses in ZEE5 have been a key concern, and we expect losses could start tapering FY24 onwards. ZEE5 has leveraged the video consumption opportunity and made significant investments in high-quality content and partnerships with prominent makers, they said.

The brokerage expects revival in ad-spends (due to easing margin pressure for FMCG) and subscription (relaxations in NTO2).

The merger with Sony has been approved by shareholders, stock exchanges, and the Competition Commission of India (CCI).