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Breaking its silence over the fate of merger with Zee Entertainment following SEBI’s revelations of possible siphoning off of funds, Sony Pictures Entertainment (SPE) on Wednesday said it takes the interim order of the markets regulator “very seriously” and it will continue to monitor developments that could affect the merger deal.
Sony released the statement after reports claimed that the company will go ahead with the deal, notwithstanding the interim order. “There have been several erroneous press reports recently speculating about the future of ZEEL’s planned merger with SPNI following SEBI’s interim order against Subhash Chandra and Punit Goenka. We take very seriously the SEBI interim order and will continue to monitor developments that may affect the deal,” SPE said in a statement.
Delayed process
Last month, Kenichiro Yoshida, CEO of SPE, had reassured investors that the merger of Culver Max (SPE’s India subsidiary) with Zee will take place within the first half for fiscal 2024. The plans to merge the two media companies were announced in 2021, wherein Zee and Sony would merge their television channel and film assets. However, the process has been inordinately delayed due to repeated legal proceedings against Zee, initiated by creditors, shareholders, and regulators alike.
Also read: ZEE and SEBI: Why the promoters and controversies are like Siamese Twins and way ahead for the stock
At the core of all of these proceedings are accusations of misappropriation of funds and poor corporate governance by the top management, especially the promoters.
SEBI disclosure
The latest disclosures by SEBI revealed that about ₹200 crore, claimed to have been repaid to ZEEL by seven entities linked to the Essel group, originated from ZEEL or other listed companies within the Essel Group. Therefore, effectively, ZEEL funded its own repayment. SEBI’s interim order could spell further trouble for the Zee-Sony merger, especially as banning Punit Goenka from holding any leadership position in Zee or any of its subsidiaries violates a key term of the merger. Goenka was expected to be the MD and CEO of the merged entity, too.
Sources in the Zee camp, however, said the merger will go ahead, with or without Punit Goenka leading the merged entity. At present, Goenka is contesting SEBI’s order at the Securities Appellate Tribunal. SAT has not granted interim relief to Goenka; the next hearing on the matter is on June 26.
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