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Zee promoters place 50 lakh shares with US investor -- Bid to pay off Rs 60-cr liability

Our Bureau

MUMBAI, July 12

THE promoters of Zee Telefilms Ltd (ZTL) have placed 50 lakh shares with a US based-institutional investor for an estimated Rs 60 crore.

Neither the name of the investor nor the amount raised was disclosed in today's official statement from the Essel Group, to which ZTL belongs.

When contacted, a group spokesperson said that an amount of roughly Rs 60 crore will be raised in the process, which would go towards discharging a part of ZTL's Rs 220 crore-liability incurred by the earlier extension of funds to investment companies fo r acquiring equity stakes in the Amitabh Bachchan promoted-AB Corp and television channel, B4U.

ZTL's promoters, who had promised to return the entire outstanding amount by June 30, 2001 could repay only Rs 60 crore by end-June. ``We did not have to place Zee shares for that,'' the spokesperson said on funds used for the first tranche. With the cur rent tranche also in place, the amount for repayment will stand reduced to Rs 100 crore.

Efforts are on to tie-up the additional required funds and the spokesperson claimed it will be effected soon, with some more financial institutions showing interest. ``All options are being explored,'' she said. The balance funds need not come from the s ame institution which offered the second tranche or for that matter, even a foreign institution.

The 50 lakh shares placed with the US-based institutional investor, amounts to slightly more than one per cent of the promoters' 60 per cent equity stake in ZTL, she said.

Company officials declined comment on the share price involved in the current transaction, including whether the price struck was at a premium to the prevailing market price of the scrip. While ZTL's scrip closed trade at the BSE on Wednesday at Rs 97.35 (today's close, Rs 108.40), the Rs 60 crore worth of the US deal would logically yield a scrip price of Rs 120.

Asked if the promoters' resort to alternative means for raising the needed funds, implied that the money earlier advanced for equity acquisition was irretrievable, Mr Rajesh Jain, President (Corporate Finance & Strategy), ZTL, said that was not the case. The previously advanced amount may take some time to come back.

``I do not wish to talk about it, given the controversy surrounding that matter,'' he said. On the process of finding a strategic partner for ZTL (UBS Warburg was recently announced as investment banker to advise on the deal), he said, the process is con tinuing.

On April 10, Zee Network (which Mr Jain said refers to ZTL and its subsidiaries) had cited an investment of Rs 220 crore towards acquiring a 28.5 per cent equity stake in AB Corp and a 15 per cent stake in B4U.

Two days later, B4U Multimedia said it had filed a legal notice against Zee Network for issuing ``misleading'' statements. AB Corp also denied the equity acquisition. The same day, Zee Network gave out a statement saying ``Zee Network is part of the Esse l Group. These acquisitions are not made by Zee Telefilms Ltd or its subsidiaries, but by Essel Group.''

It further said the Essel Group promoters have agreed to retain these assets in the investment companies and that they will not be transferred to ZTL even at a future date.