ZEE enters settlement with IndusInd Bank; stock jumps 5%

Shares of Zee Entertainment Enterprises (ZEEL) surged over 5% in intraday trade on Wednesday after the Essel Group-owned media conglomerate entered into a settlement agreement with IndusInd Bank in a case pertaining to payment disputes. Both parties have informed the National Company Law Appellate Tribunal (NCLAT) Mumbai Bench that a settlement was reached between them on March 29.

As part of the settlement agreement, IndusInd Bank would withdraw its objection to ZEE's merger with a local unit of Japan's Sony, which got stuck due to the initiation of insolvency proceedings against the Indian media company.

“We wish to update that the company and IndusInd Bank Limited have entered into a settlement agreement by which all disputes and claims have been settled between the Company and IndusInd Bank,” ZEEL said in an exchange filing today.

“There is no penalty paid and no material impact on the financial position of the company,” it added.

Following the announcement, shares of Zee Entertainment rallied 5.05% to hit an intraday high of ₹219.45 against the previous closing price of ₹208.90 on the BSE. There was a surge in volume trade as 7.6 lakh shares changed hands over the counter as compared to the two-week average volume of 4.55 lakh stocks. The market capitalisation rose to ₹20,910 crore.

In a similar trend, IndusInd Bank gained as much as 1.5% to ₹1,051.65, while the market capitalisation climbed to ₹81,290 crore. Earlier today, the share price of the private lender opened lower at ₹1,023.05 against the previous closing price of ₹1,036 on the BSE.

Earlier on February 24, 2023, the NCLT had stayed the insolvency proceedings against Zee in the appeal filed by Punit Goenka, MD and CEO of ZEEL. The tribunal also asked IndusInd Bank, a financial creditor which filed the insolvency plea against the broadcaster, to file its reply in two weeks.

In an order dated February 22, 2023, the bankruptcy court admitted the insolvency proceedings against ZEEL after it failed to fulfill its debt obligations to IndusInd Bank regarding payment of more than ₹83 crore loan issued to Siti Networks. The court had also admitted IndusInd’s insolvency plea against Siti Networks and appointed an interim resolution professional.

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.