What was Zee promoter Subhash Chandra’s plea to FM before merger fallout with Sony?

The $10 billion Zee-Sony merger may have collapsed, but recently discovered letters reveal that Zee made a final attempt to salvage the deal. On January 16, just days before the extended deadline, Subhash Chandra, chairman of Essel Group and promoter of Zee Entertainment, wrote to Finance Minister Nirmala Sitharaman. In the letter, he expressed concerns about perceived efforts to sabotage the merger and sensationalize the ongoing investigations.

In the said letter addressed to the Finance Minister, Nirmala Sitharaman, Chandra highlighted three key points:

1. Timing and urgency of SEBI's notice

Chandra acknowledged SEBI's right to investigate but raised questions about the timing and urgency of their recent notice. He pointed out that the notice coincided with the completion timeline of the merger between ZEE and Culver Max.

“The Company and all other people are cooperating in the investigation, even the department has also summoned an ex-director, questioning him for over 4 hours. My concern is the timing of this new notice, and the urgency of the same since it matches with the merger completion timeline of ZEE and Culver Max. The mentioned notice does not contain any point which is not already a part of the company's records that have already been provided to SEBI,” said Chandra in the letter.

2. SEBI's alleged predetermined mind

The letter cited an order by Justice Tarun Agarwalla, the presiding officer of the Securities Appellate Tribunal (SAT), dated October 30, 2023. The order highlighted concerns about SEBI's approach, stating that SEBI had committed a manifest error and acted with a predetermined mind. The order criticized SEBI for relying on presumptions without establishing foundational facts.

3. Sensationalising investigations

“I firmly believe that issuing a notice to the former directors of ZEE at this stage, appears to be an exercise to sensationalize the matter through media platforms. I had expressed my concerns earlier as well, in a letter to SEBI in November 2018 over negative forces impacting the valuation of ZEE, but my requests went unnoticed,” he mentioned in the letter.

“As a promoter, I understand and value the relation between companies and its lenders, to grow the Nation's economy. I have personally taken consistent efforts to engage with all the lenders and have managed to repay approximately 92 percent of my debt to the tune of around Rs. 40,000 crore. I continue to take efforts to ensure that the lenders who suffered financial losses because of me, are repaid and their losses are compensated,” he added.

According to Chandra, continued influence on investigations, especially by SEBI, could lead to significant financial losses for minority shareholders of ZEE.