Zee Promoters Get An Eight-Month Breather From Mutual Funds And NBFCs

The Essel Group reached a formal agreement with its lenders, which gives the Subhash Chandra-led group till September-end to bring in a strategic investor and deleverage.
"As per the consent, the lenders have agreed that there will not be any event of default declared till September 30, 2019, due to the movement in the stock price of Essel Group’s mentioned listed corporate entities," the group said in a statement issued on Sunday.

The statement did not provide any specific details of the agreement between the Essel Group and its lenders including mutual funds and non-banking finance companies.

Second Sunday Meeting

This is Essel Group's second meeting with lenders in two weeks.
At the first meeting on Jan. 27, the lenders agreed in principle to not sell shares of the listed companies in the event of a further drop in share prices. A little over 96 percent of the lenders were party to the agreement, Punit Goenka, the managing director of Zee Entertainment Enterprises Ltd. said in a conference call with investors.
The Zee Entertainment stock has fallen 18 percent since Jan. 24, while Dish TV Ltd. shares have fallen 27 percent in the same period.
Shares of group entities tumbled on a report that the Essel Group’s name emerged in a probe linked to large deposits made after demonetisation.
Mutual funds have a total exposure of around Rs 7,500 crore to non-convertible debentures issued by nearly 13 entities of the Essel Group, according to data available with rating agencies. NBFCs have an exposure of about Rs 4,000 crore to these securities.
Today's agreement essentially allows the company to temporarily breach the covenant which specifies the equity cover that the promoters must maintain. This cover ranges from 1.5 times to 2 times the debt. With the sharp fall in the stock price, the equity cover had fallen below the required threshold.