Zee Entertainment share price fell in early trade today after its chairman Subhash Chandra stepped down with immediate effect on Monday. Shares of Zee Entertainment Enterprises lost 9.06% to Rs 312.50 compared to the previous close of Rs 343.65 on BSE. Zee Entertainment stock has been losing for the last two days and fallen 6.12% during the period. Zee share price has lost 31% during last one year and fallen 33.82% since the beginning of this year.
On Monday, Zee Entertainment in a filing said to the bourses said, "The founder of ZEE and the pioneer of India's private satellite television industry, Shri. Subhash Chandra, during the meeting, expressed his intent to step aside as the Chairman of the Company, which he founded way back in 1992. The Board accepted his resignation with regret and applauded his vision for the company and the industry at large."
Chandra decided to resign to comply with the rule which mandates that chairman of a company's board cannot be related to its Managing Director and Chief Executive Officer. Punit Goenka, the present MD & CEO of Zee Entertainment Enterprises, is the son of Subhash Chandra.
Also read: Essel Group promoters' new stake dilution in Zee could restart discussions about strategic partner
Subhash Chandra and Punit Goenka will remain on Zee Entertainment board as representatives of Essel Group. In a statement, the company stated that Chandra wished to step down from the board altogether, but other board members urged him to stay. He will now continue as a non-executive director.
On November 21, shares of Zee Entertainment Enterprises rose up to 15% to Rs 353.20 compared to the previous close of Rs 307.15 on BSE after the media firm said that its promoter was considering selling their stake in the company. In a fresh effort to raise funds, Subhash Chandra-led Essel Group, the promoter of Zee Entertainment Enterprises, will sell up to 16.5 per cent stake to financial investors.
Also read: Essel Group to sell 16.5% stake in Zee Entertainment to financial investors
"The Essel Group is planning to sell 16.5 per cent stake in ZEE Entertainment Enterprises Limited (ZEEL) to financial investors," the media company said in a filing to the Bombay Stock Exchange on Wednesday.
The flagship media company of Essel Group said that its promoters seek to sell stake in ZEEL to financial investors, "in order to repay loan obligations to certain lenders of the group for whose benefit such shares are currently encumbered (and who have consented to such share sale by the group)".
Of the 16.5 percent divestment target, 2.3 percent will be sold to OFI Global China Fund-a subsidiary of Invesco Oppenheimer Developing Markets Fund-which already holds 8.7 percent in the media company.
By Aseem Thapliyal