'Invesco's actions motivated': Goenka explains events that transpired between him, Invesco

The Zee Board, in a stock exchange filing today, said Invesco's actions over the past few weeks have been motivated by circumstances extraneous to the company's business or performance or the issues of corporate governance or public interest.

"The board of directors of the company (board) held a meeting today, on 12  October 2021, to consider a note addressed to them, by the Managing Director (MD) and chief executive officer (CEO) Punit Goenka," the company said in a statement.

The note, said the company, explained certain events that transpired between Punit Goenka and Aroon Balani and Bhavtosh Vajpayee, the representatives of Invesco Developing Markets Fund (formerly Invesco Oppenheimer Developing  Markets Fund) and OFI Global China Fund LLC (collectively, Invesco).

According to the note, a deal was presented by Aroon Balani and Bhavtosh Vajpayee, the representatives of Invesco, to Punit Goenka in February 2021, which involved the merger of the company and certain entities owned by a large Indian group (Strategic Group).

Upon completion of the aforesaid merger, the Strategic Group would have held a majority stake in the merged entity and Goenka would have been appointed as its MD & CEO, the note submitted to the company board said. It said Goenka expressed his "apprehension" to Invesco that as the merging entities of the Strategic Group were "over-valued", it would result in a loss to the "stakeholders".

Goenka's note said Invesco in its response told him that the valuations of the entities belonging to the Strategic Group had been unilaterally "agreed" by Invesco, and that there was no room for further negotiations on the commercial terms of the deal. It also said that "no data would be forthcoming to diligence and verify the valuation being attributed to the entities belonging to the Strategic Group".

"The company's management team informed the board that in  their considered view, the valuation attributed to the  entities belonging to the Strategic Group could have been  inflated by at least Rs 10,000 crore. This would mean that if the proposed deal would have  been approved, the shareholders would have suffered a loss of at least Rs 10,000 crore," the note claimed.

It said the terms of the proposed merger by Invesco required Goenka to continue as the MD and CEO of the merger entity. "Through several correspondences, Invesco acknowledged Goenka's reputation, experience and capability as a professional," it added.

The note said when Goenka expressed "governance concerns" about the deal, Invesco informed him the deal would be consummated with or without him, even though Invesco believed he was best suited to lead the merged entity. "Invesco  time and again reminded Goenka that if he were to refuse to progress the deal, he and his family would lose out," Goenka alleged via note.

Invesco, which along with OFI Global China Fund LLC holds a 17.88 per cent stake in ZEEL, has been pressing for an EGM to discuss various issues, including the removal of Managing Director Punit Goenka. Promoter Subasha Chandra's family presently holds around 4 per cent stake in Zee Entertainment Enterprises Ltd (ZEEL) and as per the merger announced with the Sony Picture Networks India, it can go up to 20 per cent. Goenka would also lead the merged entity as Managing Director for five years.

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