Subhash Chandra wants to buy Dish TV shares worth Rs 1,500 cr, legal experts ask how

The Essel Group Chairman is reportedly in talks with JC Flowers Asset Reconstruction Co to buy its 28.2% stake in the satellite TV operator. However, with Chandra still to repay creditors of Essel Group, legal experts say he will find it difficult to raise the money.

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 | July 21, 2023 , 4:20 pm
CNBC-TV18 has learnt that as part of the agreement, Essel Group entities have committed to repaying Rs 1,500 crore within a span of seven months to JC Flowers. The terms of the settlement dictate that 15 percent of this amount would be repaid within the first 30 days, with the remaining 85 percent to be paid over the following six months, the sources said. (Image sourced from ZEE website)
CNBC-TV18 has learnt that as part of the agreement, Essel Group entities have committed to repaying Rs 1,500 crore within a span of seven months to JC Flowers. The terms of the settlement dictate that 15 percent of this amount would be repaid within the first 30 days, with the remaining 85 percent to be paid over the following six months, the sources said. (Image sourced from ZEE website)

Essel Group Chairman Subhash Chandra is reportedly in discussions with JC Flowers Asset Reconstruction Company to repurchase his family’s shares in Dish TV India, in which they have a 4.04 percent stake.

According to reports, Chandra has also presented a proposal to acquire other assets, such as shares in Zee Learn and a bungalow in central Delhi. Estimates say his purchases would entail paying JC Flowers Rs 1,500 crore for these assets.

Legal experts wonder how Chandra will pay this huge sum.

“With all debts and other issues looming over Chandra, it is difficult to foresee how he will be able to raise the funds to settle JC Flowers and get back the shares of his family. Usually, borrowers go for refinancing or sell their other non-functional assets,” said Shashank Agarwal, Advocate, Delhi HC.

According to Paritosh Dhawan, another advocate at the Delhi HC, if the transaction is done, the family’s shareholding will rise to 28.2 percent from JC Flowers 24.19 percent stake in Dish TV (Rs 860 crore as per the current price of the share).

“As per rules, if an entity’s ownership in a company crosses 25 percent, it needs to make an open offer for another 26 percent,” Dhawan explained.

Pending dues are also one of the many roadblocks in the way of the Zee-Sony merger.

In fact, proceedings initiated by lenders of Essel Group entities, in which lenders claim to be impacted by the payouts emanating from the merger, are given preference over the merger process itself.

There could be a possibility that the lenders will have to be settled first, as was with the case of IndusInd Bank, a lender of Zee, which was repaid earlier this year. The amount of the payement remained undisclosed.

The proceedings before the Securities Appellate Tribunal (SAT), challenging the order of the Securities and Exchange Board of India (SEBI), banning Chandra and Zee CEO Punit Goenka from holding any managerial positions in the company will also be crucial. So far, SAT has refused to vacate the directions passed by SEBI.

On the other hand, over the past two months, the National Company Law Tribunal (NCLT) has been closely examining the legality and feasibility of the proposed merger between Zee Entertainment Enterprises and Sony Pictures Networks India, as well as its impact on the industry and stakeholders.

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