YES Bank asks court to restrain Zee stake sale

Almost a 12 months after promoters of debt-ridden Zee Entertainment Enterprises Ltd (ZEEL) offered 11% stake within the firm, YES Bank Ltd has moved the Mumbai High Court, asking it to forestall them from promoting any extra stake, and cease Zee promoter Punit Goenka from leaving India. Essel group, which incorporates ZEEL, owes as a lot as Rs 8000 crore to YES Bank, which itself is in the midst of an advanced rescue.

According to the YES Bank petition, Zee group firm Living Entertainment Ltd (LEL) had borrowed $50 million from YES Bank in 2016 to purchase shares in its personal unit Veria International. Goenka had supplied ensures for the mortgage. Separately, LEL entered right into a put possibility settlement with one other group firm referred to as ATL Media. Both are based mostly in Mauritius. While LEL procures and provides well being and wellness content material, ATL operates 35 TV channels outdoors India in 170 nations.

Under the put possibility, if the promoter stake in Zee fell under 30%, ATL should purchase as much as a 64.38% stake that LEL holds in Veria International, and in addition repay the mortgage. After this settlement was made, LEL assigned all its rights, titles and curiosity underneath the put possibility in favour of the trustee on behalf of YES Bank as extra assure for the $50 million mortgage, together with Goenka’s assure.

According to YES Bank, after the promoters offered an 11% stake in ZEEL to Invesco Oppenheimer Developing Markets Fund on 31 July 2019, their stake in ZEE fell under 30%, breaching the LEL-YES Bank mortgage settlement. However, when Yes Bank invoked the put possibility, ATL declined to buy the dedicated 64.38% stake in Veria and switch $52.5 million to repay the mortgage.

Additionally, YES Bank additionally sought an injunction restraining Goenka from leaving the nation. It claimed Zee is trying to switch its belongings and properties out of India by declaring dividends and making undue funds to its officers. The financial institution additionally fears promoters might shift focus to offshore companies.