| MUMBAI:
The share-swap ratio has been fixed for the transfer of Zee News LTD’s six
regional general entertainment channels to Zee Entertainment Enterprises Ltd (Zeel).
The board approved issuing four Zeel shares for every 19 Zee News Ltd (ZNL)
shares.
Post the acquisition and the issuance of new shares of Zeel
to ZNL, the effective paid up capital of Zeel would be Rs 484.4 million as compared
to Rs 434 million earlier.
The companies said in a statement that the
process has been based on the “valuation report submitted by independent
valuer Grant Thornton India and a fairness opinion provided by Kotak Mahindra
Capital Company Limited.” The
appointed date for the Scheme of Arrangement will be 1 January 2010 and the scheme
is subject to the necessary approvals from the stakeholders, creditors and regulatory
authorities including of the Stock Exchanges and the Bombay High Court, the company
said.
Zeel and ZNL chairman Subhash Chandra commented, “Zee Entertainment
is already the leading provider of entertainment content across genres in the
Hindi and English languages. With channels like Zee Marathi, Zee Bangla, Zee Telugu
and Zee Kannada within its fold, Zeel would now have an unparalleled reach across
the country in the fast growing regional markets. This acquisition also provides
ZEEL the opportunity to take the regional channels international and expand revenue
streams further. This move is part of our continuing efforts to improve long-term
shareholder value.” Meanwhile,
for ZNL shareholders, Chandra said, “We have taken proactive measures to
unlock shareholder value in ZNL. The shareholders will also continue to take part
in the divested assets through their holding in ZEEL. The demerger of the R-GEC
business will lead to higher focus on the news operations of the company while
ZNL continues on its path to become a news powerhouse in the times to come. We
would be expanding our presence in the news media space in a big way in the times
to come.”
The acquisition of the regional entertainment business includes six television
channels (Zee Marathi, Zee Bangla, Zee Talkies, Zee Telugu, Zee Kannada and Zee
Cinemalu (yet to launch) along with the assets and liabilities pertaining to these
businesses. During
FY2009, the regional entertainment business had a turnover of Rs 3.4 billion,
an Ebitda of Rs 797 million and Rs 2.32 billion as capital employed till 31 March,
2009. During the first half of FY’10, the R-GEC business had a turnover of
Rs 1.87 billion and an Ebitda of Rs 597 million.
Zeel also announced
the appointment of Punit Goenka as the managing director of the company for a
period of five years from 1 January 2010 , upon expiry of his current term of
office as Whole-time Director and CEO on 31 December 2009.
Goenka said,
“The reorganisation gives Zeel a large growth opportunity and better control
to exploit synergies across the entertainment spectrum. The benefits would accrue
because of more effective cross pollination of ideas and better bundling of channels
for selling. R-GEC will bring strength to the company’s operating performance
from an already profitable business immediately accretive to revenues and operating
profits."
ZNL shares continued its upward rally and rose 8.57 per cent on Thursday to close
at Rs 54.50 on the BSE, as its investors are to get Zeel shares in line with the
swap ratio. The Zeel scrip, on the other hand, went down marginally by 0.74 per
cent to close at Rs 234.35. Also
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