Zee has incurred a cost of ₹700 crore to satisfy the conditions set by Sony, legal documents accessed by businessline showed.

In the upcoming proceedings at the National Company Law Tribunal, Zee plans to argue that, “It has incurred/provided for in books of account approximately ₹700 crores towards divestment of businesses, settlement of frivolous claims (against which Zee had a strong legal case), settlement of guarantees, procuring tail insurance to Sony’s satisfaction, discontinuing several businesses on Sony’s instructions and more.”

Zee intends to counter Sony’s termination notice claiming $90 million in damages from it citing alleged breaches by the Indian company.

Zee has categorically denied that there has been any material adverse effect in terms of the merger agreement as indicated in Sony’s termination notice.

According to legal sources, Zee will show that it had multiple discussions with Sony, including discussions on the joint business plan where month-wise profit and loss, cash flows were discussed and provided to Sony.

“Zee was in constant discussions with Sony for a substantial period of time to bring the merger to fruition. Sony consistently advised and instructed Zee to take specific steps in order to close the merger faster and Zee undertook those steps as advised and instructed by Sony. Not only did Zee spend considerable effort and time in taking those steps, but it has also incurred significant monetary costs to satisfy Sony,” the document accessed from legal sources said.

It also said that Zee informed Sony that certain actions required to fulfil these conditions (e.g., divestments) are permanent, irrevocable, and irreversible steps which are being undertaken solely for the merger.

“Sony had requested Zee to undertake actions and steps outside the scope of the agreement such as provision losses in relation to its arrangement with Disney Star which would result in booking of substantial losses [as early as March 2023], even before Zee executed this agreement with Disney Star. Availing of this debt is specifically exempted under the merger agreement. Sony was aware of the agreement through public disclosures and specific details were provided to them. Moreover, Sony had requested Zee to proceed with the agreement regardless of the fact that Star was yet to give its waiver for the provision of a corporate guarantee from the ultimate parent entity of Sony,” said a source close to the development.

Legal experts said that Zee will argue that Sony’s decision to terminate the deal at an advanced stage of the merger was not due to inaction by Punit Goenka or Zee group but because Sony was pre-determined to terminate the merger agreement.

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