The sale of Zee Entertainment's pledged shares by mutual fund companies over the past few days has brought some respite to the company promoters as the overall debt has come down by ₹1,500 crore

As lenders including Kotak Mutual Fund and SBI Mutual Fund sold their pledged shares in Zee Entertainment, promoter debt owned to the group of lenders has automatically gone down by about ₹1,500 crore with remaining debt standing at ₹4,000 crore.

Other than the two lenders, remaining four lenders have agreed to grant an extension to Essel promoters until March 2020, allowing the group to look for a strategic investor.

"Essel Group confirms that the lenders who had not agreed to grant the extension, have exited by selling the pledged shares of ZEEL. The other lenders who value the assets have in-principally agreed to grant more time to the Group," a company spokesperson told  BusinessLine .

Standstill agreement

Zee Entertainment had entered a standstill agreement with its lenders to extend repayment deadline to September 30. Zee has already returned about half of the ₹11,000 crore owed to lenders but is expected to miss the new repayment deadline. Mutual funds, therefore, have already started selling some of the pledged shares of Zee Entertainment.

The controversial standstill agreement earlier signed by the lenders, including mutual funds, allows Chandra to sell the pledged stake and credit the amount in the escrow account to repay the debt. Sources said the lenders may agree to extend the deadline given that the company has managed to repay some part of the debt. However, it is not clear if SEBI will allow an extension, given its recent objections to similar pacts.

In an earlier interview with  BusinessLine , Zee Entertainment CEO Punit Goenka had said that his first preference was a strategic partner and a deal was almost done, had it not been for the tight deadline of September 30.

With deadline extending to March 2020, Zee is expected to restart conversations for stake sale to strategic investors.

The Essel Group has already sold 11 per cent of its pledged shares in Zee Entertainment to raise ₹4,224 crore, besides selling its solar asset for ₹1,300 crore. It has, so far, received only part payment from both the deals.

On Tuesday, Zee Entertainment stock closed at Rs 279.30, up 2.65 percent on BSE, while the sensex was up only 0.2 percent.