Zee Entertainment Enterprises (ZEEL) has said that it has already spent Rs 176.2 crore (Rs 1,762 million) on its proposed merger with Culver Max Entertainment (Sony Pictures Networks India). The company's regulatory filings show that in the previous fiscal year it incurred merger-related expenses of about Rs 7.3 crore.
In December 2021, Zee Entertainment Enterprises announced a mega-merger with Culver Max Entertainment (Sony Pictures Networks India), which would bring 75 channels, two video streaming services (Zee5 and SonyLiv) and two film studios (Zee Studios and Sony Pictures Films India) under a single entity.
"To expedite the merger process, the company settled certain objection applications/insolvency proceedings filed by operational creditors and bankers for a total amount of Rs 2,230 million [Rs 223 crore] ( Rs 1,960 million already provided). Accordingly, an additional charge of Rs 270 million (Rs 27 crore) has been recorded as an exceptional item. The Company has also incurred expenses aggregating to Rs 1,762 million pursuant to such scheme of merger which has also been disclosed under exception items," the company said in its annual report for the financial year ended March 31.
"As per approvals and condition precedents of Merger Co-Operation Agreement (“MCA”), the management is in the process of either liquidating or selling the components not forming part of the aforesaid Scheme of merger. Accordingly, investment and other balances in relation to these components are classified as Non-current Assets held for sale/disposal in accordance with IND AS 105 (“Non-current Assets Held for Sale and Discontinued Operations”). Considering these assets are held for sale, the assets have been recorded at their realisable value and an impairment loss of Rs 3,313 million has been recorded in the financial statements which have been disclosed as an exceptional item," it further said.
The company also said that it has formed a Special Merger Implementation Committee to consider and approve the agreements, contracts, reports, and any other documents relating to the merger among the company, Bangla Entertainment and Sony India, and their respective shareholders and creditors.
As of March 31, 2023, the Special Merger Implementation Committee is comprised of Adesh Kumar Gupta, Director; Punit Goenka, Managing Director & CEO; Mukund Galgali, Chief, Commercial & Strategic Initiatives; and Vikas Somani, Head - M&A and Business Development.
The committee has been formed to look into the appointment of a consultant, auditor, valuer, or lawyer to assist the company in the implementation of the merger.
The Zee and Culver Max merger has been approved by the National Company Law Tribunal (NCLT). However, Goenka had to step down after a Securities and Exchange Board of India (Sebi) order barred him from holding any managerial positions in the company and other firms. On October 30, the Sebi order was set aside by the Securities Appellate Tribunal (SAT).
Earlier this month it was reported that merger talks between Zee Entertainment Enterprises and Sony Pictures had hit a roadblock due to a last-minute demand from Sony to have its own executive lead the combined entity, in contrast to the prior agreement with Punit Goenka.
It was reported that Sony had requested that Goenka let go of the position of MD and CEO of the merged entity till he gets cleared by market regulator Sebi.
As per the agreed arrangement for ownership structure, SPNI was to hold 50.86 per cent of the merged entity, Zee's promoters (the Goenka family) with 3.99 per cent, and the remaining 45.15 per cent being with public shareholders.
In June, Goenka told shareholders that the merger of Zee-Sony will be completed “with or without” him at the helm. At the time, SEBI had barred Goenka from the boards of Zee Group after it found in its investigations that Goenka and Chandra had allegedly siphoned off funds from ZEEL to show false recovery of loans.
Shares of ZEEL were trading at Rs 255.05, up by 0.85 per cent, at 11.30 AM.
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