Update from Aditya Biral Mutual Fund
Update on Essel Group Companies Exposure in few Debt Funds
The recent sudden and sharp decline in the price of shares of certain Zee group companies last week
had triggered some concerns in the market on our holdings in Essel Group companies in some of our
fixed income portfolios. It is notable that the Essel Group has large interests in Media, online Content
generation & infrastructure assets among its other businesses and has been actively working on the
sale of some of these assets to strategic partners. Most of the Group Debt is in form of promoter
funding through a LAS (Loan Against Shares) structure.The sharp fall in the price was triggered due to invocation of a small quantity of pledged shares.
However, in an unprecedented move, the promoters of the Group have acted with alacrity by not only
connecting with all stakeholders (including all lenders) but also taking steps to bring about a resolution
to this issue in a well-defined and time bound manner.In a meeting over the weekend between the promoters and all the lenders to the Essel Group which
included representatives from MFs, NBFCs and Banks, trust & faith in the Promoters’ ability to run the
business & their vision was reaffirmed as the management remains confident about the ongoing
discussions on the strategic stake sale in some of the Group’s assets. In a formal agreement, the
Lenders have together agreed to no further invocation of any pledged shares in the market as they
continue to see value in the businesses & assets of the group. The promoters on the other hand
have provided comfort that there will be speedy resolution and repayment of debt in a time bound
manner through strategic sale of assets to ensure the protection of interest for all stakeholders
including lenders & minority shareholders. As reiterated in the analyst conference call by the
management of the group on 28
th
January, the invocation of pledged shares last week shall not be
in treated in default.From our point of view, the value of underlying assets in our portfolios are intact and our portfolios
continue to have sufficient amount of security through a combination of shares & additional value of
assets that we hold as security. These assets are being separately negotiated for sale and may get
consummated very soon as they have strong interest from multiple potential suitors.