Zee responds to Invesco's open letter, issues statement. Highlights here

By Podishetti Akash
Punit Goenka, MD and CEO, Zee Entertainment Enterprises Ltd. File photo: Mint

Zee Enterprises in its fiery response to Invesco's open letter, said the shareholder's actions of the past few weeks including open letters against the company and their general lack of transparency, is more than reasoned enough to believe it is motivated by concerns entirely extraneous to any corporate governance issue.

Responding to Invesco's demand on the need to evaluate deal with Sony, Zee said that all shareholders, including Invesco will get the opportunity to evaluate and consider the deal with Sony.

"In the meantime, we urge Invesco to stop publishing half truths about the proposed deal in the media and let the Board and the management work towards finalizing this deal," Zee said in a filing.

Zee has also responded to Invesco's two specific objections in relation to the proposed deal with Sony: On the non-compete fee and increase of promoter group's stake to 20% in the merged entity.

On non-compete fee raised by Invesco, Zee said transfer of 2.11% shares in merged entity to Zee Group will be a secondary transfer and will not be dilutive to any shareholders.

Regarding Invesco's suspicion on increase of promoter group's stake to 20%, Zee said the public announcement released by the company clearly states that the promoter family is free to increase its shareholding from the current 4% to up to 20%, indicating that the promoter shareholding in the merged entity will be capped at 20%.

"There is no right provided to the promoters to increase their stake and, therefore, specifying the "manner" of such increase is irrelevant."

Slamming Invesco for casting unsubstantiated aspersions on the management, Zee said five out of the six existing independent directors on the Board have been appointed after Invesco's investment in 2019 and that Invesco was consulted and their views were positively considered at the time of making such appointments.

Expanding on Invesco's lack of transparency, Zee said, the shareholder did not disclose the fact that they were negotiating a deal on behalf of the Company without any authority, even while criticizing the sony deal by way of the open letter.

"It is only after the Company's disclosure that Invesco has felt the need to reveal the name of the Strategic Group in a press statement and has further underplayed their role in negotiations of the proposed deal as being merely facilitative."

Earlier during the day, Reliance said it has proposed a deal with Zee to merge media entities but did not plan any hostile takeover. The oil-to-telecom conglomerate said that it regrets being drawn into the dispute between Zee and Invesco.

Ever since the Sony deal was announced, Zee and Invesco have embroiled in a deep conflict, with Invesco demanding Zee to call an extraordinary general meeting (EGM) to remove the company's MD and CEO Punit Goenka. However, Zee refused to budge. 

The National Company of Law Tribunal (NCLT) has given Zee Enterprises time till 22 October to file a reply on Invesco's plea seeking an EGM.


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