Zee Entertainment Enterprises Shareholders Approve Plan to Raise Rs 2,000 Crore Through Share Sale

Zee Entertainment Enterprises Ltd. (ZEEL) shareholders have approved a plan to raise to Rs.2,000 crore through a share sale as the company seeks new investors following the collapse of its merger with Sony. The proposal received huge support, with 98.79% of shareholders voting in favor. Following the announcement, Zee’s shares were around 4% higher, trading at around Rs.162. 

Fundraising Plan

ZEEL plans to raise the funds through the issuance of equity shares or other convertible or non-convertible securities which can be done via private placements, qualified institutional placements (QIPs), preferential issues, or a combination of these methods. This comes after Sony terminated its $10 billion merger with Zee, citing unmet conditions, including financial mismanagement and unresolved dues from related parties. As part of a restructuring effort, Zee plans to lay off 15% of its workforce to ease management and reduce overall costs.

Merger Withdrawal & Proceedings

In June 2024, the National Company Law Tribunal (NCLT) in Mumbai permitted Zee to withdraw its application to implement its merger with Culver Max Entertainment, previously known as Sony Pictures Networks India. Zee initially applied to enforce the merger scheme, which the Tribunal approved in August 2023. The company sought orders for Sony to comply with the sanctioned scheme and prevent any actions that could interfere with the merger.

Financial Performance

For Q4FY24, Zee reported a net profit of Rs.13.35 crore, a rebound from a loss of Rs.196 crore in the previous year. The company’s total income rose by 3% to Rs.2,185 crore. Domestic advertising revenue grew by 10.6% y-o-y, driven by a recovering macro advertising environment and increased spending by FMCG clients. Lastly, subscription revenue growth was also notable, with gains from the company’s video streaming platform ZEE5.

Conclusion: Zee Entertainment’s approval to raise Rs.2,000 crore can be seen as a healthy move for recovery post-Sony merger collapse. With restructuring and cost-cutting measures in place, the company has plans to stabilize.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.