ZEE snaps 6-day losing streak, rises 8% on re-inclusion in NSE F&O segment

Shares of Zee Entertainment Enterprises (ZEEL) rallied over 8% in early trade on Tuesday after the National Stock Exchange lifted its surveillance on the company and decided to include the stock back into the futures and options (F&O) segment. The NSE notified that the F&O contracts with May 2023 will be available from today.

In a notification issued on Monday, NSE said that ZEEL will move out of the Insolvency and Bankruptcy (IBC) framework and hence the surveillance action in the stock will be reverted. “The futures and options contracts with May 2023 expiry shall be made available for trading in the underlying ZEEL, w.e.f. from February 28, 2023,” it said.

Last week, the NSE barred ZEEL from the F&O segment of the exchange after the media and entertainment company was shortlisted under the Insolvency and Bankruptcy Code (IBC) framework. The exchange had notified that no future and options contracts will be available for trading from April 28, 2023 onwards. However, the exchange had not imposed any ban on existing contracts with March and April expiries.

Snapping its six sessions losing streak, ZEEL shares opened 3.8% higher at ₹190 against the previous closing price of ₹183 on the BSE. Extending opening gains, the midcap stock rose as much as 8% to ₹197.75, while the market capitalisation climbed to ₹18,548 crore.

The stock has fallen 15% in the last six sessions after the National Company Law Tribunal’s (NCLT) Mumbai bench admitted a petition filed by IndusInd Bank and allowed the initiation of insolvency proceedings against the Essel Group company. The bankruptcy court admitted the case after ZEEL failed to fulfill its debt obligations to IndusInd Bank regarding the payment of more than ₹83 crore loan issued to Siti Networks. The court has also admitted IndusInd’s insolvency plea against Siti Networks and appointed an interim resolution professional.

However, in a respite to the TV broadcaster, the National Company Law Appellate Tribunal (NCLAT) on Friday stayed the insolvency proceedings against the company. Hearing a plea of Punit Goenka, MD and CEO of ZEEL, the tribunal stayed the bankruptcy proceedings initiated by the NCLT and asked IndusInd Bank to file its reply in two weeks. Following the favourable ruling by the NCLAT, the NSE revoked the ban on the new F&O segment of ZEEL.

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.