Life’s Not Eazee: Media Baron Subhash Chandra Blames ‘Negative Forces’ For Sabotaging Stake Sale Amid Debt Crisis
On a day the stock of Zee Entertainment Enterprises (ZEEL) plunged dramatically, Essel Group Founder and Chairman Subhash Chandra pinned the blame on certain ‘negative forces’ who he claimed were sabotaging the sale of the promoters' stake, PTI has reported.
Close to $2 billion was wiped off Zee Group stocks on Friday after media reports emerged that a probe into alleged post-demonetization cash transactions involving entities related to Essel Group threw up money-laundering claims.
Zee shares tanked a whopping 26.43 per cent on the BSE to Rs 319.35 on Friday, while other group company shares like Dish TV plunged 32.74 per cent to Rs 22.60.
In a letter, Chandra apologised to his bankers, non-banking financial companies and mutual funds, saying, “I believe that I have not lived up to their expectations, despite the best of my intentions." Chandra said he was a ‘rare promoter’ who planned to sell “the jewel of his crown" to pay off liabilities. “While the process is still ongoing, there are some forces that are not willing to see us succeed."
Chandra reasoned that the financial trouble was due to the group’s aggressive bets on infrastructure and a botched acquisition of Videocon's D2H business. He says:
As with most of the infra companies, even we have made some incorrect bids. In usual cases, infra companies have raised their hands and have left their lenders with non-performing assets, but in our case, my obsession of not walking away from the situation, has made me bleed ₹4,000 crore to ₹5,000 crore. Despite the loss-making projects, we continued to pay the interest and the principal, by borrowing funds against our shareholdings in listed companies.
My recommendation made to my brother Jawahar Goel to buy D2H from Videocon was one more key error, which cost me and Jawahar both, a fortune.
According to Chandra, another "mistake" was his decision to take on the debt of all group companies during the division of the family business, adding most of the new business calls have not worked, causing debt to mount.
In November 2018, the promoters of ZEEL announced their intention to sell 50 per cent of their stake in the company. Global media and tech behemoth Sony Pictures was in negotiations for picking up the stake. Essel Group holds 41.6 per cent stake in ZEEL.
Chandra said he was trying his best to expedite the stake sale of Zee Entertainment and had returned from London on Thursday night after a series of “positive meetings" with potential suitors.
Elaborating on the attempt to derail his business, Chandra said that since May/June 2018, a ‘negative force’ has been unleashed to loosen his grip as a promoter. He claimed that a series of anonymous letters were sent to all bankers, NBFCs, mutual funds, and shareholders. Chandra said he has written a number of complaints to the police, Maharashtra home minister and SEBI since November 2018, but alleged that none of this yielded any result.
"I must also mention that there is no systematic protection against the insidious attacks on us by the mentioned negative forces, but we will continue to seek the support of the system to thoroughly investigate the matter," he said.