BENGALURU: Shares of Indian media company Zee Entertainment Enterprises Ltd sunk as much as 14.4% on Thursday after the national company law tribunal admitted the firm under insolvency proceedings.
The move comes against a petition filed by IndusInd Bank Ltd over a default of 830.80 million rupees ($10.04 million). Zee was part of a debt service reserve account guarantee agreement with the bank for a term loan facility availed by Siti Networks. Both Siti and Zee are part of the conglomerate Essel Group.
Zee provided commitments for funding shortfalls in debt service reserve account related to certain financial facilities availed from banks by Siti, multiple exchange filings show.
Zee had informed the exchanges in December that IDBI Bank filed an application under insolvency proceedings against the company over a default of 1.5 billion rupees for a loan availed by Siti.
The bankruptcy proceeding comes at a time when Zee and a local unit of Japan's Sony are merging their television channels, film assets and streaming platforms.
Zee and Sony decided to merge in December 2021 to create a powerhouse in a key growth market of 1.4 billion people, to take on the likes of Netflix and Disney in India. ($1 = 82.7710 Indian rupees) (Reporting by Nandan Mandayam and Nallur Sethuraman in Bengaluru; Editing by Janane Venkatraman and Eileen Soreng)