ZEEL spends ₹176 crore on merger costs amid Sony merger delays : ET

Zee Entertainment Enterprises (ZEEL) has reported spending ₹176.2 crore on merger-related expenses in the fiscal year 2022-23 as reported by The Economic Times. This comes as the company is in the process of merging its operations with Culver Max Entertainment (Sony Pictures Networks India).

The merger, which received regulatory approvals, is facing delays due to disagreements over the CEO position in the joint entity. Punit Goenka, the current MD & CEO of ZEEL, is under investigation, prompting Sony to insist on its executive NP Singh as the CEO.

In the fiscal year 2022-23, ZEEL resolved objection applications and insolvency proceedings, settling with operational creditors and bankers for a total of Rs 223 crore. Out of this amount, Rs 196 crore has already been provided, with an additional Rs 27 crore recorded as an exceptional item, as disclosed in the company's annual report.

ZEEL entered into settlement agreements with IndusInd Bank, Indian Performing Right Society (IPRS), and Standard Chartered Bank to expedite the ongoing merger process with Culver Max Entertainment (Sony Pictures Networks India). IndusInd and IPRS had filed corporate insolvency resolution processes against ZEEL, citing defaults of Rs 83.08 crore and Rs 211.41 crore, respectively. Standard Chartered ensured the transaction with Siti Networks by utilising the debt service reserve account (DSRA) support and ZEEL's commitment.

According to the terms of the Merger Co-Operation Agreement (MCA), ZEEL's management is currently working on selling or liquidating assets that are not part of the merger plan. This decision is supported by a loss of Rs 331.3 crore in the financial statements, mainly due to assets like Margo Networks (Sugarbox).

The ZEEL board, during a meeting on November 11, 2022, gave the green light to end the ZEEL ESOP Scheme 2009 immediately, which is seen as a further move towards the merger.

To effectively carry out the merger activities, ZEEL has set up a Special Merger Implementation Committee. This committee, as of March 31, 2023, consists of Adesh Kumar Gupta (director), Punit Goenka (managing director & CEO), Mukund Galgali (chief, cCommercial & strategic initiatives), and Vikas Somani (head - M&A and business development). The committee has been given the authority to appoint consultants, auditors, valuers, or lawyers, and to empower employees or representatives as needed for the successful execution of the merger with Bangla Entertainment and Sony India. This merger involves the respective shareholders and creditors.