InvestorQ : Why are shares of Zee Entertainment still falling despite such good results and the recent sale deal?
prachi Patwardhan made post

Why are shares of Zee Entertainment still falling despite such good results and the recent sale deal?

Answer
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1 year ago


You are correct that the results of Zee Entertainment were really attractive for the June quarter. Also, the company announced the sale of 11% stake in the company by the promoters to Invesco Oppenheimer. The deal has been done at a valuation of Rs.4224 crore for the 11% stake, which values the stock at a price of Rs.400. Normally, there is a premium paid for the bulk purchases of a stock and the markets were not too impressed by the premium.

The company has committed in the post deal interview that the entire proceeds of Rs.4224 crore will be used to pay the creditors. The Zee promoters have debt to the tune of Rs.11,000 crore and were expecting to repay large part of the loan by selling 20% of the stake in the company. However, they only managed to sell 11% to Oppenheimer. That also disappointed the markets as the deal needs to be concluded by September for Zee to honor its commitment given to mutual funds.