InvestorQ : Why did Zee Entertainment correct sharply on a day when they got a 6-month extension to repay their loans to lenders?
Arti Chavan made post

Why did Zee Entertainment correct sharply on a day when they got a 6-month extension to repay their loans to lenders?

Answer
image
3 years ago
Follow

There were two reasons for the sharp correction in the stock price of Zee Entertainment. In fact, both the reasons combined to put pressure on the stock price.

a) Firstly, a Delhi High Court appointed arbitrator has instructed Subhash Chandra of the Essel Group not to sell any of un-pledged shares till October 16th. This order was in response to a plea by Indiabulls Housing Finance, wherein the Essel Group had defaulted on loans worth Rs.200 crore. The order restraining the sale of shares by Subhash Chandra is only valid till October 16th and during this period, Chandra cannot sell any of his shares. This led to a sharp price fall.

b) As a result of the freeze on share sale, the mutual funds and NBFCs had no choice but to accept an extension by 6 months for the balance. Mutual funds have been paid 50% of the outstanding loans and the balance 50% has now been extended till March 31st.

Both the above news items led to the sharp fall in the stock price of Zee Entertainment as it is a clear sign of financial stress in the group.

10 Views

image
divya Sing answered.
3 years ago
Follow
Zee Entertainment Enterprises is a buzz after the disclosure of its promotor's shareholding.
Around 90% out of the 22% of promoter's shareholding in Zee Entertainment is pledged with financial institutions.
The promoters of media company Zee Entertainment Enterprises has said in one of the report about repayment of outstanding debt. The debt payment is guaranteed in the next three months. Total loan liability amounts to Rs. 7000 crore.
Zee Entertainment Enterprises shares have gained back after the downtrend of 14% intraday on October 7th.
6 Views