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Subhash Chandra on Monday resigned as Chairman of the Zee Entertainment board but will continue as non-executive director.
The move comes days after the media mogul announced that he'll be selling further 16.5 per cent promoter stakes in Zee Entertainment, leaving prior holding down to just 5 per cent.
"In light of the changes in shareholding, Mr. Subhash Chandra has expressed his intention to resign as Chairman of the Board with immediate effect. The Board accepted his resignation and noted that this is in line with the requirements of Regulation 17 (lB) of SEBI Listing Regulations, which inter alia mandates that the Chairperson of the Board shall not be related to the Managing Director or the Chief Executive Officer of the Company," the company said in a BSE filing.
Subhash Chandra and his son jointly owe about Rs 7,000 crore to various lenders including mutual funds.
Last week, Zee Entertainment announced that promoters of the company will be selling 16.5 per cent of their shares in the company to repay their dues.
The block deal is expected to fetch the promoters in excess of Rs 5,000 crore. But at the same time it means Chandra loses control over his priced possession--Zee Entertainment.
Will continue on Zee board
Subhash Chandra and Punit Goenka will continue on Zee Board as Essel Group representatives.
Goenka will continue to remain the CEO, and the promoters will maintain management control over Zee despite the single-digit stakes they'd be left with. This is because largest stakeholder in Zee Invesco Oppenheimer has shown no interest in either a board seat or any management control.
Post the sale of 16.5 per cent stakes in the company, Subhash Chandra and his son will be left with only about 5 per cent stake in their flagship company, of which 1.1 per cent stakes are still encumbered with creditors.
Existing investor Invesco Oppenheimer will be buying 2.3 per cent of this 16.5 per cent stakes through subsidiary OFI Global China Fund.
The investment from Invesco however, is part of the 11 per cent stake sale earlier announced by the company, which was supposed to fetch ₹4,224 crore.
The promoters currently owe about ₹7,000 crore to mutual funds and financial investors, including Russia's VTB Capital, which has encumbered about 10.71 per cent stake in Zee Entertainment.
The promoter group is also planning to sell stakes in Zee Learning, in which they still have a majority stakeholding.
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