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SEBI bars Zee promoters from markets, likely delaying 3,143.5 crore raise
The regulator barred Zee Entertainment shareholders from accessing securities for two months, with promoter restrictions lasting 12 months, putting the convertible warrant plan on hold unless the order is stayed.
India’s markets regulator, SEBI, has restrained Zee Entertainment Enterprises Ltd and its top leadership from accessing the securities market, a move that legal experts said is likely to delay the company’s planned capital raise unless an appellate authority stays the order, according to LiveMint Markets.
The shareholders approved a ₹3,143.5-crore fundraising plan that would increase the promoter’s stake to 23.79% from about 4%. The raise would be conducted through convertible warrants, but the company has been barred for two months from accessing the securities market.
SEBI imposed a two-month restriction on ZEEL and a 12-month bar on founder and chairman emeritus Subhash Chandra and CEO Punit Goenka in connection with an alleged unauthorized pledge of company land in Hyderabad for loans by Essel Group entities. The regulator said ZEEL failed to disclose the fraudulent and unauthorized pledging of the land to the stock exchange and on its website.
Akshaya Bhansali, managing partner at Mindspright Legal, said the convertible warrant fundraise could be delayed by about two months if the direction is not stayed by the Securities Appellate Tribunal. A Zee Entertainment spokesperson said the company will take measures under law to protect stakeholders’ interests regarding the allegations.