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Lenders Agree To Give Essel Group Six More Months To Repay Debt

Essel Group lenders agree to give additional time to repay debt.

A construction worker adjusts scaffolding outside the clock face on Elizabeth Tower, also known as ‘Big Ben’, in London. (Photographer: Luke MacGregor/Bloomberg)
A construction worker adjusts scaffolding outside the clock face on Elizabeth Tower, also known as ‘Big Ben’, in London. (Photographer: Luke MacGregor/Bloomberg)

Mutual funds and non-bank lenders agreed to give Essel Group up to six more months beyond the Sept. 30 deadline to repay debt, according to a person aware of the details, as the Zee Group promoters serviced nearly half their liability by selling assets.

The management fulfilled 50 percent of the payout and the risk has reduced, the person told BloombergQuint on the condition of anonymity as the details are not public yet. The lenders agreed to extend the timeline till March to help the Subhash Chandra-led Essel Group realise adequate value of the assets it’s looking to sell, the person said.

Essel Group is in dialogue with the consortium of lenders, a company spokesperson said in an emailed statement to BloombergQuint. The overall asset divestment is in steady progress and the group remains focused on the repayment, it said, adding that all decisions have been in the interest of the lenders and with their consent.

The group recently paid the lenders Rs 4,450 crore after selling stake in broadcaster Zee Entertainment Enterprises Ltd. to Invesco Oppenheimer and divesting 200-megawatt solar farms. It still owes lenders Rs 5,500 crore by Sept. 30 when the initial standstill on sale of group company shares ends. Lenders, mostly mutual funds, had agreed not to sell pledged shares after the stocks tumbled as much as 37 percent in a single day in January on worries around promoter debt, increasing the risk of default.

According to the February standstill agreement, lenders will get principal and interest accrued at the time of part repayment or maturity of the instrument. The pact also allowed for additional 2 percent yield if Essel Group realised higher value from the sale of assets.

The Essel Group received Rs 4,224 crore from sale of 11 percent stake in Zee Entertainment, and Rs 1,300 crore from solar assets. It’s in talks to sell additional 480 MW of solar assets, six road projects and its finance arm. The group still owes mutual funds about Rs 2,600 crore and the remaining Rs 2,900 crore to banks and non-bank lenders, the person quoted earlier said.

The promoters of the Zee group are also locked in an arbitration with Indiabulls Housing Finance Ltd. and the Delhi High Court-appointed arbitrator barred Essel Group from selling unpledged shares.

The company spokesperson, in the statement, said the arbitration proceedings do not have any bearing on the ongoing stake sale in Zee Entertainment as shares being divested are pledged with mutual funds, non-bank lenders and banks.