Zee Group's direct-to-home (DTH) arm Dish TV has said it intends to go ahead with its merger with rival Videocon D2H, having made an assessment of the possible impact of bankruptcy proceedings against D2H's promoter group by banks.
It said it will make further filings with the Registrar of Companies on the merger.
''Upon evaluation of the above circumstances by the Advisors to the Scheme, the Company shall be taking necessary steps for completion of the Scheme. In view of the above, we would like to inform you that the Company now intends to take further steps for effecting the said merger,'' it said.
The company has appointed two directors to the board of Videocon D2H Limited to aid the integration of the two businesses.
In January, Dish TV had said that it was evaluating the impact of insolvency proceedings against the Videocon Group companies.
On the financial front, the company posted weak results with revenues down 1 per cent at Rs741 crore as against Rs748 crore for the corresponding quarter in the year-ago period. The company registered a net loss of Rs0.75 crore as against net profit of Rs10 crore. EBITDA was down 15 per cent at Rs201 crore as against Rs237.5 crore with a margin of 27.1 per cent as against 31.8 per cent.
A month ago, it was reported that the State Bank of India took Videocon to the National Company Law Tribunal (NCLT) for a loan default of Rs3,900 crore. This was followed by a statement by Dish TV that it was relooking at the merger deal.
Videocon, which is present in energy and consumer durable sectors, is reported to owe over Rs29,000 crore to various banks. It, along with other debtors, had been given a deadline of 13 December to restructure its debt, failing which the Reserve Bank of India bank had asked banks to proceed with insolvency proceedings.
Insolvency proceedings against group firms that have a stake in the DTH arm can potentially delay and alter the end results of the Dish TV-D2H merger.
The merger is envisaged in the form of a non-cash deal involving the issuing of shares of the merged entity to the holders of Videocon D2H shares. According to the current scheme, Dish TV shareholders would end up holding about 55 per cent of the merged entity, while the rest would go to Videocon D2h shareholders, including the parent company.
However, if Indian banks succeed in attaching the properties of the parent group, they could potentially end up with a claim in the new company.
Nevertheless, said Dish TV, the two groups are going ahead with the merger.
''Accordingly, the companies involved in the above mentioned Scheme intend to file the relevant intimations/E-Forms with the Registrar of Companies. Such filing date shall be the effective date of the said Scheme,'' Dish TV said.
The company did not specify what kind of filings will be made in front of the Registrar of Companies. It is expected that the filings will address the issues arising out of the bankruptcy proceedings against some Videocon Group entities.
''For the purpose of seamless integration of the businesses of Videocon D2H Limited into and with Dish TV India Limited and for synchronizing the operations of two Companies to derive the benefits and objectives of the Scheme, the Company is nominating two Directors namely Mr. Amitabh Kumar and Mr. Raj Kumar Gupta on the Board of Videocon D2H Limited,'' it said.
Amitabh Kumar has an experience of over 30 years in the Media & Telecom field and Raj Kumar Gupta has an experience of over 35 years in the Financial & Accounting field, it added.