Yes Bank files suit against Zee Entertainment over $50M loan guarantee failure - Check out stock performances

The lawsuit is filed against Zee Entertainment and its directors over a disputed loan guarantee that took place in 2016.

Jul 01, 2020 10:07 IST India Infoline News Service

A lawsuit has been filed by the private lender Yes Bank before the Bombay High Court against Zee Entertainment and its directors over a disputed loan guarantee that took place in 2016. In the Zee board of directors, is also included Subhash Chandra as well as MD and CEO Punit Goenka, sd per media reports.

People familiar with the matter told Money Control that, the lender believes Zee Entertainment defaulted on the loan and sought the dues to be paid back in the suit. Adding they said, the bank urged the court to restrain the media and entertainment firm from disposing of assets to third parties.

Further, the news agency cited one of the persons saying, "Yes Bank's case is that Zee Entertainment has obligations as a guarantor for the foreign currency term loan of around $50 million under a letter of comfort issued in May 2016. This alleged liability has been disputed by  Zee Enterprises."

The 2016 loan case is that Zee borrowed some $50M from Yes Bank for purchasing a stake in Veria International, for which Goenka gave loan guarantees.

As per the disclosure on stock exchanges, the Zee Entertainment promoters hold about 4.77% stake in the company. In a deleveraging exercise, the promoters earlier in August announced a stake sale of 11% to the US-based Invesco Oppenheimer Developing Markets Fund for an amount of Rs4,224cr.

Reportedly, the bank has asked the court to prevent Zee from selling further stake and even sought a ban on Goenka from leaving India.

At present, the parent Zee's parent Essel Group has a debt of approximately Rs8,000cr from Yes Bank.

On Sensex, the Yes Bank stock was trading at Rs25.20 per piece down by 1.56% at around 10.29 am. On the other hand, the Zee Entertainment stock was trading at Rs172.50 per piece up by 0.82%.

However, the Zee Media stock plunged by 2.47% trading at Rs6.70 per piece, and that of Zee Learn stock were performing at Rs15.75 per piece below 2.72% at the same time.

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