Why Zee Entertainment shares fell for five sessions

Shares of Zee Entertainment Enterprises (ZEEL) extended their losing streak for the fifth straight session on Friday, falling nearly 12% during this period amid a slew of negative developments. The stock of the Essel Group company has tumbled in the last nine out of the ten trading days and dropped 16% during the said period.

On Friday, ZEEL shares dropped as much as 4.6% to ₹189.60 against the previous closing price of ₹198.75 on the BSE. The midcap stock touched its 52-week low of ₹176.60 in the previous session, while it hit its 52-week high levels of ₹308.65 on April 4, 2022. With a market capitalisation of ₹18,610 crore, the stock has given a negative return of 11% to its shareholders in the last one year, while it lost 26% in a six-month period. On a year-to-date basis, the stock has tumbled 20%, while it slides 12% in a month.

ZEEL shares touched its 12-month low level on Thursday after the National Company Law Tribunal’s (NCLT) Mumbai bench admitted a petition filed by IndusInd Bank and initiated insolvency proceedings against the Essel Group company after it failed to fulfil its debt obligations. The tribunal has appointed Sanjay Kumar Jhalani as the interim resolution professional (IRP) for the process. The bankruptcy court admitted the case pertaining to repayment of debt of more than ₹83 crore issued to Siti Networks. The court has also admitted IndusInd’s insolvency plea against Siti Networks and appointed an interim resolution professional.

Based on the NCLT’s order to include the media company in the insolvency process, the National Stock Exchange (NSE) has barred ZEEL from the futures and options (F&O) segment of the exchange. No future and options will be available for trading in the underlying ZEEL from April 28, 2023 onwards, while All existing contracts with March and April expiries will continue, the NSE said in a notification.

"ZEEL has been shortlisted under insolvency and Bankruptcy Code (IBC) framework," NSE said. "No fresh month contracts will be issued on the expiration of February 2023 contracts. All existing contracts with March and April expiries shall continue," it added.

As per the NSE circular, a margin of 100% will be levied on all existing derivative contracts with effect from T+2 day which is, for all new positions created from February 27, 2023 onwards and on all existing open positions as on February 24, 2023.

In February last year, IndusInd Bank filed a bankruptcy case against debt-laden Zee Entertainment with the NCLT under the Insolvency and Bankruptcy Code (IBC). The case pertains to alleged default of ₹83.08 crore term loan facility issued to Siti Networks, a cable TV operator promoted by Essel Group. Zee was a party to the Debt Service Reserve Account Guarantee Agreement (DSRA Guarantee Agreement) signed with lnduslnd Bank for the term loan facility advanced to Siti Networks.

In December, private lender IDBI Bank moved NCLT seeking initiation of insolvency proceedings against ZEEL, claiming ₹149.60 crore of default under a debt service reserve agreement entered into by the bank and the company for the financial facility availed by SITI Networks. Besides, in April last year, Housing Development Finance Corporation Ltd (HDFC) also filed an insolvency application against SITI Networks Ltd for alleged default of ₹296 crore.