Subhash Chandra-led Essel Group reaches settlement with JC Flowers ARC; to repay Rs 1,500 crore over 7 months

By Ritu Singh

In a significant development, Subhash Chandra-led Essel Group companies have come to an agreement to settle their debt with JC Flowers Asset Reconstruction Company (ARC), two people aware of the matter told CNBC-TV18.

The deal relates to Essel Group’s debt amounting to around Rs 6,500 crore, which JC Flowers ARC had acquired from Yes Bank at a discounted rate as part of the lender’s transfer of a Rs 48,000 crore Non Performing Assets (NPA) portfolio to the ARC for a little over Rs 11,183 crore in December 2022. Zee Learn, a part of the Essel Group, had earlier signaled its intention to resolve matters with JC Flowers ARC by disclosing its plans to the exchanges on August 8.

It had said, “Zee Learn Limited has signed settlement agreement with JC Flowers Asset Reconstruction Private Limited on August 7, 2023 to settle its obligations with respect to loans borrowed by certain trusts and entities. Till the time the loans are settled in terms thereof and legal proceedings initiated in connection therewith are either settled/withdrawn, the matters covered under the legal proceedings remain sub judice.”

The company had not disclosed the terms of the settlement.

CNBC-TV18 has learnt that as part of the agreement, Essel Group entities have committed to repaying Rs 1,500 crore within a span of seven months to JC Flowers. The terms of the settlement dictate that 15 percent of this amount would be repaid within the first 30 days, with the remaining 85 percent to be paid over the following six months, the sources said.

In a possible move to aid this repayment, JC Flowers ARC might consider releasing some of the security it holds, which includes real estate assets and shares of certain Essel Group companies such as Zee Learn, in proportion to the repayment schedule, said one of the people quoted earlier.

However, the person added that JC Flowers ARC will retain its 25 percent stake in Dish TV till the entire agreed amount is repaid by the Essel Group companies. The ARC had acquired this stake from Yes Bank when the debt was transferred to them.

Following this transfer, Yes Bank no longer holds any exposure to the Essel Group companies, retaining only security receipts (SRs) as part of the 15:85 arrangement during the transfer of the portfolio from Yes Bank to JC Flowers ARC. The recovery for JC Flowers ARC also could not be ascertained as the ARC had bought the debt from Yes Bank at a “significant discount.”

JC Flowers ARC declined comment on CNBC-TV18’s report.