As Zee eyes Rs 2,237 cr cash push, Chandra spurs governance debate, rejects loan claims

During a call with analysts and investors, Zee Entertainment Enterprises Limited (ZEEL) Chairman Emeritus Subhash Chandra clarified that the promoter group will neither raise debt nor pledge shares to finance the proposed Rs 2,237 crore fund infusion into the company through warrants.

On July 3, Chandra told analysts and shareholders, “No, we are not taking any loans, nor are we pledging any shares. The funds being utilized are our own — they are recoveries from promoter-linked entities, which have come back to us,” during the call.

It is to be noted that the promoter group’s planned investment has drawn scrutiny from proxy-advisory firms, as it would raise the shareholding of Punit Goenka and his family from 3.99 percent to 18.39 percent.

ZEEL shareholders are scheduled to vote on the special resolution between July 6 and July 9.

Read more: Proxy advisors urge shareholders to block Zee promoters’ Rs 2,237 cr stake hike

Zee Entertainment Enterprises has unveiled plans to raise Rs 2,237 crore through the issuance of fully convertible warrants to promoter entities, a move billed as a decisive step to bolster its balance sheet, accelerate its content-tech agenda, and counter the fallout from its aborted Sony merger. However, the announcement has triggered fresh scrutiny from proxy advisory firms, which are urging shareholders to vote against the proposal, citing concerns over promoter dilution and corporate governance.

ZEEL is set to receive the fund through a preferential allotment of fully convertible warrants, with the company proposing to issue 16.95 crore warrants at Rs 132 each, subject to shareholder approval. Management believes the fresh capital will help stabilize the balance sheet and support new initiatives in India’s evolving entertainment sector, including digital-first content and platform investments aimed at creating shareholder value.

While Chandra has reportedly acknowledged ZEEL’s existing cash reserves of around Rs 2,400 crore but stressed the need for additional capital to remain competitive. Additionally, does not intend to wait the full 18-month period allowed to bring in the warrant funds, aiming instead to infuse the entire amount as early as possible.

Meanwhile, India’s three leading proxy advisory firms have come together, urging Zee Entertainment shareholders to vote against the promoters’ attempt to significantly increase their stake in the company.

At an Extraordinary General Meeting scheduled for July 10, the board has sought shareholder approval for a preferential issue of 16.95 crore fully convertible warrants worth ₹2,237 crore, which would raise promoter holding from 3.99% to 18.39%.

The pricing mechanism also drew criticism. Priced at ₹132 each, just above SEBI’s mandated floor, the warrants, convertible within 18 months, could allow promoters to acquire shares at a steep discount if market rates rise. Proxy advisors have urged Zee to consider more equitable options, such as a rights issue or qualified institutional placement, suggesting these alternatives would have been more transparent and fair to existing shareholders.