Sebi probes MFs over Zee stock plunge as company settles with lenders
04 February 2019
Market regulator Securities and Exchange Board of India (Sebi) is reported to have summoned the chief executive officers of four mutual fund organisations and one credit ratings agency for alleged maligning of the Zee group and the subsequent hammering of the company’s stock.
Sebi member Madhabi Puri Buch has summoned the chief executive officers of mutual fund houses Birla MF, ICICI MF, HDFC MF, Reliance MF and Brickworks, consequent to the enforcement of securities by two lenders on Friday. The CEOs will be quizzed on the matter today, according to a report by news agency IANS.
The Sebi move follows a 33.4per cent plunge in Zee Entertainment Enterprises shares following rumours that Zee's promoter Essel Group may figure in a probe linked to demonetisation-led deposits of Rs3,000 crore.
Zee group shares have been in focus since a news report last month linked Essel Group to demonetisation-related transactions that are being probed by Serious Fraud Investigation Office (SFIO), according to news agency Reuters.
The company has denied any role in demonetisation-related transactions that are being probed by the SFIO, according to news agency Reuters.
Shares in Zee plunged 33.4 per cent intraday on the Bombay Stock Exchange on 25 January, before closing 26.4 per cent lower. The stock has, however, recovered some of the losses and was up 11.6 per cent at Friday’s close compared to the lows.
Zee and Essel Group chairman Subhash Chandra last week said the company has successfully arrived at an understanding with lenders to whom the shares held by the group's promoters have been pledged.
Zee said under the agreement, lenders will not declare a default owing to the steep fall in its share prices the previous week, according to an earlier report by IANS.
The management has assured investors that business fundamentals of the media firm are intact and promoter stake sale and the Essel Group's stressed asset sale is on track.
While Zee chairman and his son claimed 96-97 per cent approvals to the so-called settlement as of 27/28 January, there was absolutely nothing signed off by lenders for even a week thereafter, and all announcements to that effect were patently false and misleading, the IANS report added.
As of Friday, not even 10 per cent of lenders had signed off on the alleged "settlement", IANS reported.
Based on the enforcement of securities by two lenders, the company has called emergency meetings of lenders weekend to secure approvals, according to the agency.
As on January 27/28, when the announcements were made by the Zee chairman and his son regarding the alleged 96-97 per cent approvals to the so-called settlement, there was absolutely nothing signed off by lenders for even a week thereafter, and all announcements to that effect were patently false and misleading, the IANS report adds.
In a second round of meeting with lenders, the Subhash Chandra-backed Essel Group, however, is reported to have managed to convince its lenders that there will not be an event of default declared till 30 September. This provides the required amount of time for the group’s management, to complete the strategic sale process of its key assets.