ZEEL completes Rs 2,094 crore warrant allotment to promoter group

MUMBAI: Zee’s ownership story has added another chapter, this time with a sizeable stake in the making. Zee Entertainment Enterprises Ltd (ZEEL) has completed the allotment of 20,94,47,805 fully convertible warrants to promoter-group entity Sunbright Mauritius Investments Ltd at Rs 126 per warrant, giving the group a potential route to raise its holding in the company to 17.90 per cent on a fully diluted basis.

The allotment was completed on August 21, following shareholder and stock exchange approvals and interim relief granted by the Securities Appellate Tribunal (SAT) in connection with the proposed fundraise.

Sunbright has paid 25 per cent of the issue price upfront, amounting to Rs 31.50 per warrant. The initial payment works out to approximately Rs 659.76 crore, while the remaining 75 per cent, or Rs 94.50 per warrant, is payable within 18 months of the allotment.

That puts February 21, 2028 as the deadline for the balance payment required for conversion.

Each warrant entitles Sunbright to convert it into one equity share of ZEEL with a face value of Rs 1. Until the outstanding amount is paid and the warrants are converted, the company’s paid-up share capital will remain unchanged.

If the entire warrant holding is converted into equity, Sunbright’s stake in ZEEL would rise to approximately 17.90 per cent, making the issue a significant potential increase in promoter-group ownership.

The allotment follows the August 14 SAT order, which allowed ZEEL and Punit Goenka to proceed with the preferential warrant issue, subject to both appellants depositing the full penalty within one week. The tribunal also extended the deadline for completing the warrant issuance by a week.

SAT further allowed ZEEL to use its mutual fund investments for ordinary day-to-day operational requirements, while restricting their use for other purposes, including payment of the proposed dividend.

The tribunal proceedings followed a July 31 SEBI order concerning the alleged unauthorised use of a ZEEL-owned property in Hyderabad as security for loans raised by entities linked to the company’s promoters.

According to the SEBI order, the property was allegedly used without the necessary corporate approvals and disclosures. The regulator’s action followed the discovery of missing title deeds relating to ZEEL properties.

SEBI said the arrangement benefited entities connected with major shareholders without adequate disclosure to ZEEL’s board, audit committee, shareholders or investors, and treated the conduct as violations of securities laws and corporate governance requirements.

With the warrant allotment now completed, the immediate capital infusion is in place, while the larger ownership shift will depend on Sunbright making the balance payment and exercising its conversion rights.