100% deal money is for Zee loan repayment: Punit Goenka

After burning the midnight oil for many nights, Punit Goenka, chief executive of Zee Entertainment Enterprises, finally signed a deal to sell a stake in the company at 2.15 pm on Wednesday. A relieved Goenka sat down with Gaurav Laghate and Vinod Mahanta to discuss the deal structure, promoters’ debt situation and Zee’s way forward. Edited excerpts:How is the deal structured?It’s a straightforward deal, wherein they will buy 11% of the equity for a consideration of Rs 4,224 crore, based on how many shares we are able to deliver to them. There is no quasi-equity, no convertible debt, it’s a pure transaction of shares that they will buy from the promoter family.Will this deal solve debt issues?Total debt after some pledge invocation and share sale is at approximately Rs 11,000 crore at the promoter level. This deal solves a lion’s share of that problem. We have also closed deals for solar and roads portfolio. There will not be any further need for loans as through these non-media assets and some more stake sale at Zee, we should be comfortable to pay off the entire debt. We started out with intent to sell 20%, and 9% is still on the table. Several people have approached us to explore a deal. The good part is people are engaging with us, despite our saying that the floor is set now.Will all money be used for repayment?Yes, 100%.How does it go forward with lenders?Shares are with the lenders. I have not discussed with them yet. I have to now ask them to place those shares in the escrow. Once the escrow agent confirms to Invesco Oppenheimer that I have received X number of shares as per your contract, please remit the money, they will do the settlement. We have started informing the lenders about the contours of the deal.Will you be able to revoke all pledges ?No, some pledges will remain. But I’m confident lenders will support us as this money will be received in August, well before deadline. They have supported our intent of wanting to pay and this is the biggest testimony of our intent.Are you happy with the current deal?I will not say I’m unhappy with the deal. Even at this price, given how the market is, to get a financial investor to pay you a premium, imagine what the real asset value is. The financial investor is also seeing that he will make something out of it — that’s why he is giving me a premium. I’m happy they have chosen to repose their faith in us as they will be the single largest shareholder.Why was the Comcast-led consortium’s offer not entertained?Their timelines were not matching our deadlines. For example, it was a nonbinding offer and then they talked about certain conditions, which get fulfilled on September 30. So, regulatory approval would start then. I have no leeway with lenders to negotiate the September deadline. I can’t share offer details, but a buyout was never in the discussion.How many interested parties did you meet in last eight-and-a-half months?We travelled to Los Angeles, New York, London, Hong Kong and Singapore. My Emirates status has gone up from Gold to Platinum (laughs).What were the biggest challenges?First, the January 25 event (Zee shares fell 26% after media reports alleging links between the group and Nityank Infrapower & Multiventures, a company that is under the scrutiny of investigative authorities for deposits of over Rs 3,000 crore during or after demonetisation) was a big hurdle, followed by the general elections. But after that, literally in the past two months we have stitched the deal.Was James Murdoch architect of the Comcast-led consortium offer?(Smiles) James and I have known each other since he was running Star India. I must have reached out to him in May. We may have spoken many times. But it didn’t work out, unfortunately.How big a distraction was this deal?Last couple of weeks, 40-50% of my time was spent on this. But given the spectacular results we have delivered in the last quarter, I must say, contrary to belief, I didn’t spend most my time on the deal.

from Economic Times https://ift.tt/2yqkd9S