IDBI Bank Limited has challenged the National Company Law Tribunal (NCLT) order, which approved the merger of Zee Entertainment Enterprises Ltd and Culver Max Entertainment, earlier known as Sony Pictures Network India.

The company law tribunal last month had given its nod to the merger proposal of ZEE with Culver Max. The merger scheme was approved by 99.97% of ZEE shareholders, and also by other regulators like the Bombay Stock Exchange (BSE), National Stock Exchange (NSE), and Competition Commission of India (CCI).

ZEEL, in a stock exchange filing, today says: "The company has been served with an appeal on behalf of IDBI Bank Limited against the Company before the NCLAT, Delhi, challenging the order dated August 10, 2023, passed by NCLT, Mumbai Bench approving the composite scheme of arrangement amongst Zee Entertainment Enterprises Limited, Bangla Entertainment Private Limited and Culver Max Entertainment Private Limited (formerly known as Sony Pictures Networks India Private Ltd)." 

Notably, IDBI has filed two separate petitions against ZEEL in respect of alleged defaults in loans availed by Siti Networks Limited (SITI) from IDBI, claiming a debt of around ₹163.92 crore. 

One petition was filed before NCLT, Mumbai Bench, against ZEEL; and the other before DRT (Debt Recovery Tribunal) against SITI, ZEEL, and ARM, jointly, for recovery of loans availed by Siti from IDBI.  

The NCLT petition was dismissed on May 19, 2023, against which IDBI filed an appeal before the appellate tribunal NCLAT, which is not admitted yet. 

The Debt Recovery Tribunal’s matter is still pending. 

ZEEL says its "stand is that it had executed a limited and specific DSRA guarantee agreement in the favour of IDBI to guarantee SITI's obligation to maintain the DSRA as required under the terms of the facility agreements”.

As per the terms, says ZEE, SITI had availed working capital facilities of ₹150 crore and a term loan of ₹60 crore from IDBI. "The obligation of ZEEL with regard to DSRA was limited to maintaining a balance equal to two-quarters of installment payments or 2 quarters of interest for the working capital facilities availed by Siti." 

This matter is also pending adjudication, but ZEE says the chances of liability against the entertainment major are "very remote".  

The ZEE-Sony merger deal was announced in December 2021 in order to create the largest entertainment network in the country. However, ZEE faced several hurdles and delays due to ongoing legal battles with capital markets regulator SEBI.

The merger is expected to make the combined entity the largest media conglomerate in India, with a 28% share (leaving behind the current market leader, Disney-Star, with a 22% share).

The combined entity will include 75 TV channels, two film studios – Zee Studios and Sony Pictures Films India, as well as two video streaming services – ZEE5 and Sony LIV, and digital content studio Studio NXT, which is currently under Sony Pictures Network.

The Zee Entertainment Enterprises Ltd (ZEEL) stock closed 3.54% up today. 

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