Mumbai: In a new development, Zee Entertainment Enterprises Ltd (Zeel) managing director and chief executive officer has publicly spoken regarding the company’s ongoing boardroom battle with its investor, Invesco Developing Markets Fund.
“We will ensure that no one maligns the intrinsic value of this company for their own benefit, and I continue to pursue this in the best interest of all our shareholders and at immense personal costs," stated Goenka.
Referring to the merger proposal with media business under Reliance Industries in February-March, he wrote that the reason for disclosing the series of communications exchanged between Invesco and the board of directors of Zeel was "to bring the truth out in the interest of all our stakeholders."
According to Goenka, the valuation attributed to the media entities under Reliance was inflated by Rs 10,000 crore and as a result, felt that the deal would result in a loss for shareholders of the company.
“My attention was on the imbalance observed in the valuation and how it was not in the best interest of our shareholders. The only reason I did not agree to the proposal was that the shareholder value was getting compromised,” he added.
Goenka acknowledged the stance taken by Invesco but noted that “communications pertaining to such proposals are always well-documented, and they speak to the contrary.”
On a personal note, he questioned Invesco’s intentions on the basis of their actions and asked pertinent questions, “Why didn’t Invesco make its plans public earlier? Does good corporate governance only apply to corporates and not their institutional investors?”
He affirmed his faith in the Indian judicial and regulatory system and said that under the guidance of his legal counsel he would take the “required steps to safeguard Zee and its future.”
The Zeel-Invesco tussle began when the media company’s two top investors Invesco Developing Markets Fund and OFI Global China Fund LLC who combined own 18 per cent stake in the company had sent a requisition notice to the company on 11 September to call an EGM even after two weeks, the investors moved to NCLT, citing provisions of company law, according to which the company is bound to call for an EGM within a specific number of days if stakeholder demanding it owns more than 10 per cent of the company.
The investors had also sought the removal of long-standing directors and close associates of the Chandra family from the board. The two independent directors Ashok Kurien and Manish Chokhani have already submitted their resignations.
The investors moved to have six nominees appointed to the board of Zeel, which included Surendra Singh Sirohi, Naina Krishna Murthy, Rohan Dhamija, Aruna Sharma, Srinivasa Rao Addepali, and Gaurav Mehta as independent directors of the board for a term up to five consecutive years. The notice was received by Zeel on 12 September, and it informed the stock exchanges on 13 September, adding that the appointments are subject to approval by the ministry of information and broadcasting (MIB).
Zeel refused to conduct the EGM citing ‘shareholders interest,’ and moved to Bombay high court on 2 October seeking to declare the requisition notice as "illegal and invalid." Meanwhile, Invesco moved a requisition petition with the National Company Law Tribunal (NCLT) to call for an EGM.
The next Bombay high court hearing is scheduled for 21 October and the next NCLT hearing is scheduled for 22 October.