Zee Entertainment calls the media’s allegations of a $240 million “accounting hole” erroneous and untrue and disputes them. The troubled Indian broadcaster claims to be working with SEBI and that they are responding to inquiries for remarks. Bloomberg News sources claim that SEBI finds a possible diversion of almost Rs 2,000 crore, which is ten times more than first estimated.
The troubled Indian broadcaster Zee Entertainment denied on Wednesday that there was a $240 million, or Rs 2,000 crore, “accounting hole,” citing inaccurate and erroneous claims in the media.
“Rumors and reports about accounting problems within the organization are untrue and inaccurate. The corporation was quoted by news agency Reuters as saying, “We have extended complete cooperation on all aspects and are in the process of providing all comments requested by SEBI.”
According to Bloomberg News, which cited sources on Wednesday, SEBI has reportedly discovered that almost Rs 2,000 crore may have been misappropriated from the company—roughly ten times greater than its earlier estimations. The amount determined by SEBI, according to the article, is not set in stone and could vary once the regulator has had a chance to consider the executives’ comments.
Zee Entertainment’s stock plummeted; as of 10:15 am, the shares were trading for Rs 172 each, down more than 10%.
Executives from Zee Entertainment and Sony Group were reportedly making a “final-ditch” effort to resurrect their $10 billion merger, which was formally called off on January 22, according to an ET story published on Tuesday. In contrast, the company clarified in a statement to the stock exchange that it had not engaged in any talks or other events as reported in the aforementioned article, and that it “categorically confirms that the above-mentioned news item is factually incorrect.”
SEBI is focusing on Zee.
Zee Entertainment’s founder, Subhash Chandra, was accused by the SEBI in June of falsifying loan recovery in order to fund private financing transactions. The regulator prohibited Goenka and Chandra from holding executive or director positions in listed companies after alleging in an interim decision that they misused their authority and embezzled money.
The Securities Appellate Tribunal, however, halted the ruling, granting Goenka a respite. However, Sony apparently considered this to be a matter of corporate governance.
A letter addressed to Finance Minister Nirmala Sitharaman, written by Chandra, said that SEBI was “acting with a predetermined mind” and asked for action “to safeguard the interest of the minority shareholders of ZEEL”.
Despite having talks to extend the deadline for transaction completion, Zee Entertainment did not meet the requirements for the merger, according to Sony Group, which terminated the merger arrangements.
Zee approached NCLT and the Singapore International Arbitration Centre (SIAC) to seek implementation of the merger deal, which would have created the largest entertainment network company in the country, after the Sony Group terminated it. In addition, Zee has started legal proceedings to refute the $90 million, or Rs 748.5 crore, claims Sony Group made to the SIAC.
The deal fell through, despite having practically all regulatory permits. It would have formed a massive entertainment company in which Goenka’s family would have owned 3.99 percent and Sony would have owned 50.86 percent.
