Zee Entertainment Enterprises is getting ready to finalise its stake sale deal within six to eight weeks and the company is in advance stage talks with multiple parties, says Managing Director and CEO Punit Goenka.

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Shares of Zee Entertainment on Tuesday fell as much as 8.7 percent, after an analyst report said the firm was among the highest in promoter share pledges as of March. The company touched its three-month low in the previous trade session. In an interview with CNBC-TV18, the CEO clarified that no pledged shares were sold on Tuesday, adding that the firm's first priority would be to repay the debt on the promoters' balance sheet.

Excerpts:

There is a lot of concern in the market about what is happening with the stake sale. Though the deadline is September 30, the market is getting nervous. Do you have any information on whether there was pledged share selling on Tuesday?

No pledged shares were sold on Tuesday. There are speculations in the market that some pledged shares have been sold but I can confirm none of that happened. The stake sale process is well underway and we are in advance stages of dealing with multiple parties. In fact, I can confirm that I have received multiple term sheets already and we are well within the purview of the timeline to close it, even before the September 30 deadline.

You said no pledged shares were sold yesterday. So have you got any information on this selling? There was delivery volume of about 24 lakh shares yesterday.

I would not be able to tell you that; it will come out in due course.

You say that you have multiple term sheets. There has been absolutely no guidance to the market. We have seen stock price collapse. What is leading to this delay?

There is no delay. This is not a small deal. It’s worth $2 billion and due to confidentiality I am unable to share names or details until the deal is closed. I think the rumours in the market are causing all these speculations. I do not know why these rumours are going around, but I can tell you that we are well within our timeline of getting this deal done.

In April, you had said that there was a high possibility that you would sign on non-binding term sheets by the end of April or first week May. We have passed those timelines and that could be a reason for this nervousness. So you are saying you have received some non-binding proposals. Is that what you are saying?

Yes, I am confirming that we have multiple non-binding term sheets with us already.

What are the chances of signing on one of them, by when can we expect something of that sort?

As I said, we are working at breakneck speed to close the transaction with either one of those parties. Of course, our endeavour is to do it well within the deadline but my timeline would be 6-8 weeks for us to get this thing done.

Have you spoken to the lenders? Are they on board because the stock is breaking down and there is likely to be a pain point for everyone, for those holding shares? Last time we had that pain point at around Rs 400. Are the lenders willing to give you time till September end?

Yes, absolutely. All the lenders have been on board with us and have given us those timelines of announcing the deal by July 31 and closing and consummating it by September 30.

At the end of March, there was an indication that there could be five suitors, mostly all of them global and the valuations could be at the current levels and there wouldn’t be any worsening in terms of valuations. Does that still stand? I know you cannot talk about specifics but can you give us these broad indicators?

I can say that our first biggest priority is to repay all the debt on the promoters’ balance sheet and that is the objective we are working towards.

How many non-binding offers do you have at this point?

Two

Are they both strategic or is it one strategic, one financial investor, because you had said that you were open to strategic as well as financial investors coming in?

I am unable to disclose that at this point because of confidentiality.

One of the concerns is that the current management should stay on in order to steer the ship forward post deal. Is that a part of the negotiations? Can you provide some clarity on that?

Yes, that would be a part of the negotiation and it is more from the buyer’s point of view, not that we are insisting on anything of that sort.

Are you sensing any kind of sabotage to your stock? Last time, the management was clearly on record saying that the shares which were sold in the open market were essentially pledged shares. Now you say that not a single pledged share was sold yesterday.

You can imagine. I will not start rumours about myself. So, somebody else is doing it.

Have you spoken to the Securities and Exchange Board of India about it?

We will explore all options and speak to the regulator about it.

Just correct if I am wrong, in the first week of March, the promoters sold shares of Zee Entertainment to meet commitments because of lack of liquidity. Have you faced such a problem after that?

That is correct. We had sold some of the pledged shares, not anything from our own shares. But that would not impact the price at all because these are already pledged shares. As I told you, we are filing a complaint.

At the promoter level, are you facing any fresh liquidity crunch?

No, we are not facing any such issues.

There was some talk about trouble with the auditor, the auditor not being on board with a couple of things. Can you talk to us about that?

No, there is absolutely no truth in that. The auditors are doing the audit as we speak, and yesterday we issued the date of our board meeting for announcing the results. So, things are fully under control.

Q: When are you announcing results?

May 27.

What about Dish TV, it is also a group company, what is the update on that? Bharti Singtel was to make an offer for it. Any clarity on that?

As you know, that business is now controlled by Jawahar Goel and hence I would not be at liberty to talk about it. I think it is best to get his views on that part.

There was also a buzz that Sony had walked out of the deal. Would that be right?

As I said earlier, I cannot comment on specifics of deals and the party’s. So let us just leave it at that.

In terms of the balance promoter holding, would you need to sell some more to meet any kind of liability going forward?

As I said earlier, our prime objective is to clear the entire loan against shares and that is what we are working towards.

First Published:May 8, 2019 5:03 PM IST