Zee Media promoters safeguard stake as co issues 13.5 cr warrants

Zee Media operates several channels under the Zee News brand

Zee Media Corp, the company that runs Zee branded news channels, has issued warrants for 13.5 cr shares to promoter group Subash Chandra family, further strengthening the promoters’ efforts to protect their position in the company.

Currently, the company has around 62.54 cr outstanding shares. Out of this, only around 5.33 cr — or 8.52% — are held by various promoter group entities.

The issue of the 13.5 cr warrants entitles the promoters to convert these warrants into shares at any time they want.

Thus, in case of any threat to their position within the company, the promoters can convert the warrants into shares.

Each warrant has been issued at Rs 3.05, and can be converted into shares by paying Rs 9.15 more — taking the total cost of each share to around Rs 12.20.

Given that each Zee Media share is already priced at Rs 14.85 each in the open market, the warrants can be converted at a price that is Rs 2.65 lower than current market price, representing a net gain of close to Rs 36 cr upon conversion of all warrants at current prices.

Given its financial situation, the promoter group is unlikely to convert the warrants currently, and is likely to do so at a later time.

Promoters have paid Rs 41.18 cr to have the warrants issued, and will need to spend another Rs 119 cr to convert them into shares.

The move to have the warrants issued is part of the Subhash Chandra family’s efforts to ring-fence its holdings in various group companies, after it lost of most of them when banks and financial institutions seized the shares due to loan defaults.

As a part of such efforts, the promoters have also supported a deal to merge flagship Zee Entertainment Enterprises with the local unit of Sony Pictures in India.

Interestingly, the proposal to issue these warrants in Zee Media Corp was opposed by 90.53% votes from institutional investors in the company.

However, non-institutional investors such as other companies, NRIs, high-net-worth individuals and regular investors who hold 83% of the shares, supported the move to issue these warrants to the promoters, helping the proposal sail through comfortably.

In the end, over 79% of the counted votes were in support of the warrant issue in favor of the promoters, while only 20.8% were in opposition.