Mumbai: Uncertainty created by promoters of Zee Entertainment Enterprises Ltd for their share sale is causing investors to dump its shares, overlooking the company's business prospects.
The country's leading broadcaster saw its shares tank by nearly 9% intra-day after a Delhi High Court-appointed arbitrator ordered Chairman Subhash Chandra not to sell unpledged shares because of an ongoing dispute with Indiabulls Housing Finance Ltd.
Later in the day, it was reported that Essel Group--the promoter--had met mutual funds and lenders on Wednesday, asking for an extension of a standstill pact.
Mutual funds and banks had agreed not to sell the promoter's shares pledged with them under the condition that Essel Group repaid its dues by Sep 30. The company has already paid about half of its dues.
Zee Entertainment Enterprises is looking to extend its plea at a time when concern of corporate governance and ability to repay debt have become one of the top priorities for investors. Its shares have lost more than 31% of their value over a 52-week period.
The owners have been trying to cut debt by selling stake in the company. Earlier this month, they completed the first tranche of stake sale to Invesco Oppenheimer Developing Markets Fund.
The group, which has been trying to offload about a further 7-8% stake to repay lenders, may now face a setback because of the arbitrator's order. More than half of the promoter's stake in the company is pledged.
Shares of Zee Entertainment Enterprises today ended at nearly 8% lower at 308.85 rupees on the National Stock Exchange.