The National Company Law Tribunal (NCLT) has allowed ZEE Entertainment Enterprises Limited (ZEEL) to withdraw its application seeking directives for Sony Group Corp-owned Culver Max Entertainment and Bangla Entertainment to execute their composite scheme of arrangement, according to a report by The Economic Times.
ZEEL had initially filed the implementation application following the termination of the merger agreement by Culver Max and Bangla Entertainment on January 22, citing an alleged breach of the merger cooperation agreement (MCA).
Following this, Culver Max and Bangla Entertainment lodged applications with the NCLT contesting the validity of ZEEL’s application.
The termination effectively halted the multi-billion-dollar merger deal between Sony and Zee, which was formally agreed upon on December 21, 2021, after more than two years of negotiations, the report said.
In April, ZEEL announced its decision to withdraw the merger implementation application to focus on pursuing claims against Culver Max and Bangla Entertainment through the Singapore International Arbitration Centre (SIAC) and other legal avenues. This move is aimed at enabling ZEEL to explore strategic growth opportunities and enhance shareholder value.
Sony’s Indian entities had initiated arbitration proceedings against ZEEL at the SIAC, seeking $90 million in termination fees, alleging breaches of the MCA in connection with the deal termination on January 22.
This triggered a significant decline in ZEEL’s stock price by 33 per cent to a 52-week low of Rs 152.5 on January 23, prompting the company to undertake corrective measures following four years of declining profits and subdued revenue growth.
The report quoted ZEEL chairman R Gopalan as saying, “The immediate priority for the company is to focus on performance and achieve its targeted goals for the future. We have reviewed the key steps taken by the management over the last few months that are result-oriented, and we believe that the company is well poised to chart a stronger growth trajectory.”
He further said, “Hence, after seeking an independent legal opinion, the Board has advised the management of the company to withdraw the implementation application filed before the Hon’ble NCLT. The Board remains focused on maximising shareholder value, strengthening the company’s claims in arbitration, and enabling the company to explore strategic opportunities.”
ZEEL has started a cost-cutting drive to achieve an 18–20 per cent Ebitda margin by FY26, which includes a workforce reduction of 15 per cent from its current staff count of 4,500, the report said.
First Published: Jun 24 2024 | 3:09 PM IST