Zee Entertainment Enterprises in its statement on the exchanges stated that Punit Goenka, MD and CEO of the merged entity was agreeable to step down in the interest of the merger. According to Zee, proposals to that effect were discussed including the appointment of a director on board of the merged company, protections of conduct of pending investigations and legal proceedings in the best interests of of Zee’s directors and shareholders, and consequent notifications to the scheme to incorporate the same. Zee adds that it also discussed a six-month extension with Sony to complete the merger but all these proposed schemes were rejected by Sony.

Punit Goenka’s future in the merged entity was the biggest bone of contention stalling the merger. Sony did not want Goenka in any executive capacity and wanted him to step down from the role of MD and CEO of the merged entity. However, it appears that Sony had other reasons to terminate the agreement as well.

Culver Max or Sony Pictures Networks India has slapped $90 million termination on Zee Entertainment Enterprises, on account of alleged breaches by Zee of the terms of MCA, invoking arbitration and seeking interim reliefs against Zee. Zee informed the exchanges on Monday. 

“in its Board Meeting held today, took on record communications received from Culver Max Entertainment Pvt. Ltd…ZEEL categorically denies all the assertions raised by Culver Max and BEPL on the alleged breaches under the terms of the MCA, including their claims for the termination fee,” Zee said in its statement. 

Zee further added, “The Board of Directors noted that all efforts and steps were taken by ZEEL in line with the Merger Cooperation Agreement, approved by its shareholders and all regulatory authorities. ZEEL has consistently worked towards the implementation of the mentioned scheme in the interest of the shareholders. ZEEL also held several deliberations and good faith negotiations with Culver Max and BEPL, with a view to consider an extension of the merger completion timeline, that did not materialise.”

In its termination notice, Sony has essentially invoked arbitration proceedings to recover $90 million claims in damages from Zee for breaching the agreement. On the other hand, Zee denies breaching the terms of the agreement. businessline had earlier reported that Zee is also considering filing a legal suit against Sony claiming damages, if it did not go through with the merger, since according to Zee, it had to shut down several profitable channels as per the notice by the Competition Commission of India which asked for structural changes from Zee in order to approve the merger.

R. Gopalan, Chairman, Zee Entertainment Enterprises Ltd. said, We are evaluating the next steps and considering the appropriate course of action. The Board has noted that the Company took all the required steps in the course of its integration journey over the last two years, to ensure that the scheme is implemented at the earliest. That said, the Board would like to assure its stakeholders that the Company will take all the necessary actions, in the best interest of all stakeholders, including by taking appropriate legal action and contesting Culver Max and BEPL’s claims in the arbitration proceedings. The Board has complete faith in the highly experienced senior management of the Company and will continue to guide the team. We recognize and value the trust our shareholders and stakeholders place in us, and we express gratitude for their continued support.” 

Zee also added that it had displayed utmost commitment towards the merger by undertaking several permanent and irreversible steps, resulting in one time and recurring costs for Zee.