Zee Entertainment Enterprises chief executive Punit Goenka expects the company’s stake sale to happen sooner than the April deadline it has set for itself. Suitors for the stake are predominantly US players, Goenka tells ET, as he discusses the stake sale process, dealing with a bear cartel and the Essel Group’s deleveraging efforts. Edited excerpts:
Has the Essel Group controversy affected ZEE’s stake sale and what stage is it at?
The strategic sale process is going well. I’m actively in dialogue with all of them (prospective investors) and I’m pretty confident this thing will happen even sooner than the April deadline, at least in terms of the agreements, etc. I have spoken to all of them so the fear that something would have spooked them is unfounded; they understand that the intrinsic value of the asset is very much intact. There is not even an iota of doubt. The two issues (stake sale and developments at Essel Group) are very, very different. From that perspective, they are keen to pursue with the process, and I’m very confident we will get this thing done in the stipulated time.
Who are you in serious talks with?
It is difficult for me to give you names because I’m also bound by confidentiality but they are within the set of names coming up in speculation (names doing the rounds include Sony Pictures and Comcast). Largely, they are global players, predominantly based out of the US. At the forefront are the US companies and let’s leave it at that.
Any Indian company in the fray — RIL?
As a publicly listed company, the process is open so anybody can ask for data, details, etc. But no banker has confirmed to me yet that anybody from India has started actively participating in the process. We don’t even have an non-disclosure agreement signed with any domestic investor.
Are valuations are being discussed?
Yes, absolutely. But please allow the process to happen. It will not be fair for me to give a range in public today.
Won’t the current situation inhibit your chances of getting a premium in the sale?
I think definitely any prospective buyer will want to look at the situation, and use that as another tool for negotiation. I am still confident that while we may not have the luxury of all the time we wanted, the asset is what the asset is. I’m not selling anything other than assets’ underlying value. We know what our walkaway kind of things are. We are very clear we should be able to derive the right value for the company — maybe not the most premium, but at least the right value.
Will the lenders be willing to extend the window for asset sale?
The lenders have agreed that there will not be any event of default declared till September 30 due to the movement in the stock price of Essel Group’s listed corporate entities. This consent provides the required amount of time for the group’s management, to complete the strategic sale process of its key assets without any compromise on the value. We have asked them that putting undue pressure on the company, you are only asking me to then sell it cheap and that’s not beneficial to either the lenders or to us. I think they should allow us to run the process and I’m pretty confident they see the value.
Any risk of creating more pledges?
No, we have categorically said no more pledges. Where we are is a standstill and we want to work with that. I’m hearing rumours every day and if I believe in them, by now everybody should have sold and gone. We had an agreement with practically all the lenders, but any situation where price corrects overnight, you will have people thinking of how to exit. We are holding unity; let’s see how the coming weeks go.
Have you got a fix on what really happened on January 25?
It was the bear cartel. It was… instigated. I think somebody used that opportunity to play the market and the bears kicked in. We have been complaining to stock exchanges for over the last six months. I don’t know if they are doing anything or not, but we truly believe these are not real market conditions, these are created conditions. If you track last five years’ data on ZEE’s open position and it becomes 4x in the last six months, something is wrong. The fundamentals of the businesses are right and for something like this to happen within 10 days of my delivering a stellar result, tells me there’s something fishy here.
Who were the ‘negative forces’ mentioned in chairman Subhash Chandra’s open letter?
We will never come to know. These things don’t happen in the open. I’m not pointing at anybody; I am saying bear cartels are bear cartels. Let’s leave it at that. It’s the regulator’s job to get into details and figure it out.
What about Essel deleveraging efforts?
The stake sale in infra assets is one critical piece. Now Zee also becomes a critical piece as we want to run both parallel to ensure this deleveraging happens as soon as possible. This has to happen in the next six months.
Is there any remote chance of your family ceding control of Zee Entertainment?
I have always maintained in jest that if somebody makes me an offer, I can’t refuse. But that’s a hypothetical situation. Let me put it another way. I think today, to run this company, expertise and experience are required; no new entrant into the country can get it overnight. I am confident about what we bring as management to the table. If some partner doesn’t value that, I wish them all the best, but I would hate to see a new guy coming to this country and run a great company to the ground. I’ve not heard from anybody so far that they want control.
There have been reports of Essel’s alleged links with Nityank (being probed for suspicious post demonetisation deposits)…
As per our official statement of January 25, we have clarified that Nityank Infrapower & Multiventures is an independent company and does not belong to Essel Group.
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