Zee Group begins debt repayment, but how will it complete? The Essel Group owned by Subhash Chandra has repaid around Rs.4500 crore out of its debt owed to mutual funds for the group infrastructure and power forays. While a start has been made towards repaying the Rs.17,000 crore owed to mutual funds, it is still…
Essel Debt
Zee Group begins debt repayment, but how will it complete?
The Essel Group owned by Subhash Chandra has repaid around Rs.4500 crore out of its debt owed to mutual funds for the group infrastructure and power forays. While a start has been made towards repaying the Rs.17,000 crore owed to mutual funds, it is still unclear how Essel Group will manage to close out the balance.
What exactly happened?
To understand the Essel case, one must step back to early 2019 when large mutual funds like HDFC, Birla and Kotak had asked investors to roll over their FMPs due to a liquidity crunch at one of the bond issuers. Subsequently, it did emerge that these FMPs were invested in bonds issued by group companies of the Essel group and were backed by the pledge of shares given by Subhash Chandra, the promoter of the group. In effect, this was promoter funding with inadequate collateral. That means; the MFs did not even have the luxury of selling the shares in the market to get their funds released. Shares were already down 30%, which means the FMPs would have ended up with a hole. That was when the mutual funds signed a standstill agreement with the Essel Group. Under the agreement, Essel group promoters would sell their holdings in Zee and its group companies to repay the debt before the end of September. Till that time, the mutual funds had committed to Chandra, the funds will not sell the pledged shares. READ MORE...Best Online Stock Trading, Financial Services & Mutual Funds Investment Solution provider India - Trustline
