It seems Invesco made the right call by completely exiting. As the onion gets peeled off layer by layer, the deal is getting delayed. The past deals of Essel group are coming to haunt them one after another.
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My write-up on how Subhash Chandraâs fraud with Shirpur Gold Refinery might affect the Zee and Sony merger
If youâre a billionaire interested in multiple lines of business that have nothing to do with each other, the normal way to go about it is to make separate companies for each business. That way, your companies are insulated from each other. If one of your companies takes a lot of loans and things get out of hand, it wonât affect all your other companies that might be more responsible or even debt free.
Or if you use one of your companies to commit fraud, your other companies would remain unaffected. If youâre this billionaire, you want to ensure that your fraud is limited to your designated fraud-indulging company, without having its effects spill over into your other companies.
Subhash Chandra is a billionaire who became rich primarily in the media business with Zee TV. He now owns (or has owned) companies across media, entertainment, infrastructure, hospitality, packaging, etc. Last month, SEBI issued an enforcement order saying that one of these companies, a refinery called Shirpur Gold Refinery, was Chandraâs designated fraud-company which stole money from its lenders.
Another of Subhash Chandraâs companies, Zee Entertainment, has been in the process of merging with one of its competitors, Sony Pictures, since December 2021. Chandra would hope that the Shirpur fraud doesnât affect this merger. Well, SEBI hopes otherwise.
To shut down a company, lend it money
Hereâs a fun way to steal money from a bank:
- Borrow money. Tell the bank that you need it for your companyâs operations
- Donât use it for your companyâs operations. Instead, lend this money to some other companies (that you secretly own)
- Shut those companies down. The bank goes to your original company for its money but you put your hands up and point to these other companies which donât exist anymore
- ??? Profit
Of course, things donât work like this exactly. For one, shutting down a company that has borrowed money isnât straightforward. Its creditors have to be paid back!
Hereâs what happened, all from SEBIâs enforcement order.
Shirpur Gold Refinery borrowed âš404 crore ($49 million) from Punjab National Bank. It then lent this money to a number of companies, the largest chunk of which went to a company called Altrarex which borrowed âš241 crore ($29 million). Of course, Subhash Chandra & family owned all the companies hereâShirpur, Altrarex and whoever else Shirpur lent to. [1] Straightforward stuff till here.
Once Altrarex had this money, the problem then became how does one shut this company down so that it doesnât have to be returned to Shirpur, and well, Punjab National Bank?
The way most companies die is by taking loans which theyâre unable to repay. Someone lends money to a company and expects regular payments back with interest. If the company doesnât repay on time, the creditor gets annoyed and takes it to court. The court then sells off everything the company has and repays the creditor with whatever it can recover. Classic.
Altrarex borrowed money from Shirpur, yes, but it also borrowed money from a company called Ekmart. A relatively small amount, about âš49 crore ($6 million). If you hadnât guessed it, yup, Ekmart was also owned by Subhash Chandra & family. Is there a single company that this man doesnât own?
Anyway, Altrarex borrowed money from Ekmart and didnât pay it back. So Ekmart took Altrarex to the NCLT. In my last post about the airline Go First, I wrote:
If the bank goes to the NCLT, itâs not as straightforward as the court deciding that the company must pay back its debts. The idea goes that if this company hasnât repaid its debt to this bank, it probably hasnât to other banks as well. It likely doesnât have enough money to pay back all its lenders; that is, itâs insolvent. So the court must step in and help figure a solution so that all the creditors that are owed money are happy. As happy as can be in the circumstances, of course. Essentially, itâs not about one particular bank or creditor anymore, itâs about everyone that is owed money.
Once Ekmart took Altrarex to the NCLT, this is what a normal day would look like:
- Ekmart goes to the NCLT and tells the court that Altrarex owes it âš49 crore but isnât paying it back
- There is a public announcement! All creditors of Altrarex are invited to come and ask for their money back
- Eventually all creditors THAT SHOW UP get something
Of course Shirpur didnât show up. Ekmart (which had lent a small amount) took Altrarex to the NCLT, but Shirpur (which had lent a large amount) didnât claim its money back when it had the chance. So Ekmart would get its âš49 crore back but Shirpur would get none of its âš241 crore. That cash would remain with Altrarexâs owners (Subhash Chandra) and the company would not exist any more.
Fool me twice, shame on me
If a company wants to merge with another company, it has to go through a number of approvals. If itâs publicly listed, the stock exchanges must approve. If itâs a bank, the RBI must approve. The Competition Commission must approve, just in case the combined entity might have too much market share. Once all thatâs done, the NCLT needs to approve, after keeping all the remaining stakeholders in mind.
An important stakeholder in a company is its lenders. If a bank has lent money to a company that is trying to merge itself with another, it isnât necessarily a problem. The combined entity can just take on the original companyâs debt and pay it back whenever itâs due. Thatâs how it usually goes.
Zee Entertainment has been trying to merge with Sony Pictures for the last year-and-half. Zee Entertainment had taken on some debt. It had borrowed from a number of banks and not always paid them back on time. For banks that have lent to Zee, this would be a great time to ask for their money back. Zee is vulnerable and it needs to be at its best behaviour, else the NCLT might not give its go ahead.
So Zee settled its âš83 crore ($10 million) loan from IndusInd Bank, who had been chasing Zee for quite some time. Zee also settled another âš211 crore ($25 million) that it owed IPRS, another creditor chasing it.
But a lot of others want to get paid! IDBI Bank wants âš149 crore ($18 million). Axis Finance wants âš146 crore. JC Flowers wants âš377 crore. You get the gist. Technically, these debts shouldnât block Zeeâs merger with Sony Pictures. The new, combined company can take all of these debts. Thatâs exactly what Zee is saying to the NCLT as well.
But SEBI just asked the NCLT to consider its order against Shirpur Gold Refinery before it gives its approval to the merger. What SEBI is saying to the NCLT is this: âHey, the owners of this company thatâs asking for a merger? They just set up an intricate system that abuses your own bankruptcy processes so that they can steal from their lenders. Are you absolutely sure they wonât steal from their creditors again?â.
Footnotes
[1] While SEBI identified that Subhash Chandra and his family ultimately owned all these companies, their ownership on paper isnât straightforward. They have someone else own these companies on paper. SEBI identified that these people were also ultimately connected to Subhash Chandraâs companies (by holding directorship, for instance) and figured that it was a proxy ownership.
[2] Zee Entertainment may not have directly borrowed from all these companies. IDBI, for instance, had lent to another company Siti Networks, but Zee had guaranteed that loan. Axis Finance and JC Flowers, on the other hand, have a more complicated ask. They lent money to other companies owned by Subhash Chandra, and he had personally guaranteed those loans (not Zee).
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Zee Sony meger finally blessed by NCLT today. All the objections have been dismissed.
Request for inputs from experts from Media industry to share their views on the future prospects of the merged entity
Thanks
Disclosure. Invested from lower levels in anticipation of merger
NCLT approves the Zee Sony Merger.. because it decided Zee's creditors were not really Zee's creditors
I have a feeling that this isnât going to be the last time I quote this section. Hereâs me from a couple of months back:
If youâre a billionaire interested in multiple lines of business that have nothing to do with each other, the normal way to go about it is to make separate companies for each business. That way, your companies are insulated from each other. If one of your companies takes a lot of loans and things get out of hand, it wonât affect all your other companies that might be more responsible or even debt free.
Or if you use one of your companies to commit fraud, your other companies would remain unaffected. If youâre this billionaire, you want to ensure that your fraud is limited to your designated fraud-indulging company, without having its effects spill over into your other companies.
The billionaire here is Subhash Chandra. He does a bunch of unrelated things: media, construction, packaging, a lot of other stuff. One of his companies is Shirpur Gold Refinery which on paper was a gold refinement business but was really just a loan stealing business.
Another of Subhash Chandraâs companies is Zee Entertainment. Zee is more legit, it owns real businesses like some television channels and a music label. Zee Entertainment wanted to merge with one of its competitors, Sony Pictures, and has been trying to get approvals for nearly two years now.
The idea behind having multiple companies doing different things is that if one of your companies messes up, the others arenât affected. Shirpur might have been a front for stealing money, but that shouldnât be affecting Zee merging with Sony just because they have the same owner. But then there was a chance that the Shirpur stuff might affect Zeeâs merger? Zee had creditors too and they didnât want Zeeâs merger to go through before they were paid back. Subhash Chandra now had a recorded history of stealing lendersâ money, after all.
Anyway, earlier this month, the NCLT finally decided that the Shirpur stuff doesnât affect Zeeâs merger and Zeeâs creditors werenât actually Zeeâs creditors. From its order:
⌠none of the above petitioners are the direct creditors of Zee nor have any privity of contract with Zee whose scheme of merger is pending for approval before this bench.
and,
⌠all the above petitioners are having claims against the other entities of Essel Group among which Zee is just one of the entities.
thereâs more,
This bench further observes that the above petitioners having failed in ensuring recovery of their alleged dues from other entities of Zee through the above referred legal proceedings are opposing this scheme of Zee as a last resort for their recoveries.
Zeeâs apparent creditors had lent money not to Zee but to other companies part of Essel Group, Subhash Chandraâs holding company, and saw this as a âlast resortâ to get paid back.
Hereâs one of the supposed creditors. Axis finance had lent âš100 crore ($12 million) to Cyquator Media Services in 2018 keeping Zeeâs shares as collateral. In 2019 Cyquator missed an interest payment, so Axis Finance sold the Zee shares it held, but by then its share price had fallen and it could only recover 40% of the original amount.
Thereâs also IMAX Corporationâyup, yup, the Canadian theatre company whose equipment Nolan lovesâthat says that E-City Entertainment, another Essel company, owes it $25 million. Since 2006! Itâs been 17 years!
My favourite creditor though is probably JC Flowers. JC Flowers is an American distressed debt investor, you know, the kind that are going after Byjuâs. Those like Axis Finance and IMAX presumably didnât expect to be in this situation. But JC Flowers chose it!
In 2018, Yes Bank lent âš377 crore ($45 million) to Essel Infraprojects Ltd (yes, another Essel company). This was before Yes Bankâs founder was jailed for fraud, money laundering, etc., and the bank was still giving out loans to any company that asked. Yes Bank, of course, imploded in 2020 and suddenly had new owners who were stuck with these loans that werenât likely to be repaid, ever. So Yes Bank sold these loans to JC Flowers for super cheap. Itâs JC Flowersâ business to negotiate, fight, whatever, with borrowers to get their money back, and thatâs what itâs doing here.
Hereâs the NCLT in its order:
⌠the claim of JC flower being the assignee of Yes Bank who has lent credit facilities to Essel InfraProject Ltd. arises out of a letter of comfort given by Dr. Subhash Chandra.
âŚ
The Honâble Bombay High Court in Yes Bank Ltd. Vs. Zee Entertainment Enterprises Ltd. and others held that a letter of comfort is not a guarantee when the letter simply mentions that issuer will take steps to ensure repayment by the borrower.
When Yes Bank was deciding whether to lend to Essel Infraprojects, Subhash Chandra took out a nice piece of paper and wrote, âHey man can you lend this money please? Iâll help you get it back later, pinky promise,â and Yes Bank believed it and gave the company âš377 crore apparently without any collateral. More from the NCLT:
this bench is unable to understand as to how Yes Bank lent such a huge amount to EIL basing on a mere letter of comfort of Dr. Chandra which is not a guarantee as per law. We can understand if such act is done by a layman without knowing law but not by a financial institution that deals with public money.
I can probably help the bench understand how Yes Bank lent this huge amount on a mere letter of comfort. Yes Bankâs founder is now in jail! For fraud! Thatâs how! JC Flowers was probably not expecting much from this particular loan. But hey, no harm in trying, right? Look at IMAX!
This entire episode was just a way for everyone to rediscover why billionaires form multiple companies in the first place. [1] If youâre going to steal your lendersâ moneyâand this is definitely not financial adviceâdonât do it with the company that might go for a merger in the future.
Footnotes
[1] The funny part is that Zee Entertainment actually did have creditors. IndusInd Bank and IPRS. Zee waited and waited, but then it settled with them before the NCLTâs hearing.
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The merger looks dicey at this stage. The company itself is doing well having better sales and profits. If the merger doesnât go through and there is a dip, it is a buying opportunity.
Puneet with 4% (tail) canât be allowed to wag the 96% (dog) shareholders
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Merger is called off.
Need to watch is EGM will be called by Shareholders to remove CEO.
I wondered if Zee could merge with Network 18 if nothing goes through. The only risk is this would create some kind of monopoly and hence the regulators might not approve of this.
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I do not follow zee, just curious why does zee have to merge with someone or other? It is one of oldest company and built from scratch. Also few other standalone media groups are also doing fineâŚ
Why is urgent need to merge with anyone? Thanks
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- They wanted to create a Consolidated Media Giant and increase the collective market share by streamlining operations, resources and becoming more focused. It would also give them more dry powder and financial might to bid for sports broadcasting contracts like IPL.
- The growing popularity of streaming services like Netflix and Disney+ Hotstar posed a challenge to traditional media companies. The merger aimed to create a strong competitor in the digital space. Zee could have gained access to Sonyâs international network and distribution channels, allowing them to expand their reach beyond India and tap into new markets.
- The term sheet also includes an option for the Zee promoter to increase shareholding to 20% (from puny 4%)
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I fail to understand how the law in India works.
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Invesco with 18 percent company wasnât able to do anything against promoters with 4 percent company 2 years back!!
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The company promoters have a track record of proven frauds!! Not 1 or 2,but many. What is law doing, police? sebi??
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Promoters get free 1100 crores as non compete fee from Sony?? Lolll. Who suffers? Majority investors (not even minority). They owned 4 percent of company which is worth 600 crores currently, but get 1100 crores free!! How was this even approved??
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It is surprising that so many domestic mutual funds have invested huge amounts in Zee. A few years back the same company had defaulted on debentures held by MFs causing panic and redemption in income funds and leading to losses to investors and loss of credibility of many fund managers. However, the same MFs are investing in the equity of the co
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Sharing a video discussing in-depth the current media scenario in India.
Hope you find it useful
dr.vikas
Sony values Zeel at EV of around 33,200 crores, but company is currently available at 15,600 crores (25/01/2024). Seems like a good buy, right? Worth considering!
Please watch the above video for more clarification. As per the video, Disney/Hotstar + Jiocinema aka Viacom are merging. Such an entity is much larger than Zee + Sony. And always be careful when your competitor is Reliance. ( Ex of Vodafone & Idea after the launch of Jio)
Personal opinion
dr.vikas
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I donât think its an apple to apple comparison. Telecom and Media are not the same game. Splurging money alone doesnât guarantee big hits, it can lead to capital misallocation (Amazon Prime: Rings of Power). Reliance may become a monopoly in sports broadcasting but thereâs always room for a second player in entertainment.
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An overview of the current merger situation and a fun analysis of if Sony can even terminate this merger
Itâs long but I have to start by summarising the drama. Zee Entertainment and Sony Pictures are both large media companies in India. Zee is run by Subhash Chandra & family while Sony is owned by its multinational namesake in Japan.
In 2021, Zee and Sony decided to merge. Combined, they would become the largest media company in India valued at $10 billion. It was mostly a deal of equals. Sony would have a controlling stake at 50.86% of the merged company while the remaining 49.14% would be with Zee.
Even so, Zee always seemed to want the deal slightly more than Sony. The companyâs share price was at around âš170 before the deal was announced and nearly doubled to âš318 after. Subhash Chandra & familyâs authority was also being challenged in the company, they owned just 4% stake because of being forced to sell their shares to pay off debt not long before the deal. The Sony merger was their redemption. Shareholders clearly liked it and hey even the family was going to get some money in the process.
At any given point in time, Subhash Chandra & family have multiple lenders chasing them for money. For the lenders, this was the one chance they had to get some of their money back. Zee initially tried to resist but then finally repaid some of its lenders and in August 2023, a good year-and-half after the deal was signed, Zee got the final approval it needed from the NCLT.
While all this approval stuff was happening, SEBI announced that it had been investigating the Subhash Chandra family for fraud. It found evidence of the family stealing funds from banks (I wrote about it here) as well as from Zee itself. [1] SEBI decided that Punit Goenka, Zeeâs CEO and Subhash Chandraâs son, could no longer be the director of a listed company. This included both pre- and post-merger Zee.
This was a problem! Zeeâs merger agreement with Sony which had by now received all approvals said that Punit Goenka was to be the CEO. So Goenka contested SEBIâs decision in the SAT and the latter ended up staying this part of SEBIâs decision. So Goenka could again become the CEO of the new merged company as was always the plan.
Late last month, Sonyâwhich had been sitting quiet waiting for the merger to be completedâdecided that it had had enough and terminated the merger. It also asked Zee for $90 million as termination fee! The two companies have now taken each other to court in India and Singapore. Zee is asking the NCLT to force Sony to close the deal. Sony is asking the Singapore International Arbitration Centre to ask Zee to pay it the $90 mil.
The egregious bit here (apart from the casual fraud) is that Sony is the party thatâs terminating the deal but is also the party thatâs asking for the termination fee. Thatâs not how it works! The point of the termination fee is to discourage parties from breaking a deal thatâs decided. If the party that terminates the deal gets paid $90 million, it wouldnât be a lot of discouragement.
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But can Sony terminate the deal?
Once a merger deal is agreed upon and the agreement signed, it is legally binding. The participants canât just back out! The termination fee isnât a price to get out of a deal because someone changed their mind. Itâs what the terminating party must pay because they were unable to close the deal for a valid reason, because of being unable to get approvals, for instance.[2]
So how exactly does Sony think it can get out of this deal and also get paid for it? Unfortunately, neither Sony nor Zee has made the merger agreement or Sonyâs termination notice public yet, so weâll have to pick up bits and pieces from the media and the few disclosures the two have made.
Hereâs some stuff from Sonyâs termination press release:
- Zee and Sony had 24 months to close the deal. If the deal didnât close in that timeline, the two could spend 30 days discussing in âgood faithâ and decide on an extension.
- If they could not decide on an extension, either party could terminate the merger.
- Sony and Zee couldnât agree on an extension, because, as Sony claims, some of the merger conditions werenât met. Apparently, by Zee. So Sony decided to terminate.
If Sony terminated the deal because Zee goofed up somehow, thatâs one way for Sony to both terminate the deal and ask for a termination fee. âI wanted the merger to happen but you made it impossible for me to do so,â is basically what Sony is saying. âNow pay me!â
Zee was (is) desperate for the merger to close, whatever could these merger conditions be which Zee didnât fulfil?
Hereâs Reuters with its hands on some leaked emails:
Emails show there was a face-off between Sony and Zee about four Russian subsidiaries that dealt in content creation and distribution, as the merger agreement had stipulated no dealings with entities based in countries under U.S. sanctions. Russia is under Western sanctions for the Ukraine war.
In a Jan. 5 email, Erik Moreno, executive vice president for corporate development and M&A at Sony Pictures Entertainment said Zee had not ended ties with the Russian entities even though it was âabsolutely criticalâ, and the merged entity âwould under no circumstances inherit the Russian entitiesâ.
And,
The emails show another key sticking point was Zeeâs 2022 decision to enter into a $1.4 billion deal with Disney to purchase certain TV cricket rights for India.
Sony said Zee had decided to furnish a bank guarantee and a deposit totaling $406 million for that deal. And Zeeâs bid to take debt for the deal, which was âwithout prior written consentâ of Sony**, took the Indian firmâs total debt to more than $451 million - above the merger agreement threshold.**
Moreno wrote said in the Jan. 5 email that Sony had several times âraised our concerns and reservations in relation to the (Disney) alliance agreement ⌠including, in respect of the consideration agreed to be paidâ.
If Zee is in breach of the merger agreement, Iâd like to know its one major breach. One is enough! If there is an argument to be made and if instead of the main argument I hear three mini arguments, the sense I get is that itâs just stuff being thrown at the wall hoping something will stick.
Is Russia the reason Sony wants to back out? I canât imagine Zeeâs Russian revenue being more than a blip. Zee says that it has already shut down its Russia business[3] but getting rid of the companies is taking time because of Russian regulations. Shutting down a company is generally time consuming, and the Russian government is intentionally making it difficult for companies to leave. Can Sony use this as a reason to get out of the merger? If the Russia stuff was in the agreement, sure. But Zee seems serious about getting rid of its Russia subsidiary so thereâs probably not a lot of ground to ask for that $90 million.
The other thing is the purchase of TV cricket rights. If youâre a company thatâs going through a merger, there is this uncomfortable period between the time of signing the merger agreement and the merger actually happening. Youâre technically still on your own, you still have to make your everyday business decisions, but you also have to ensure that the company that finally merges is still the same company that your counterparty had initially agreed to merge with.
If you sign a merger agreement and then the next day sell off all your assets and lay off all your employees, the lawyers would call this âmaterial adverse effectâ which means that your company is no longer the company the other party originally agreed to buy. When you sign the merger agreement, you would also agree to âcarry out business in the ordinary courseââessentially, Zee had to ensure that it remained Zee and didnât do anything drastic, at least without first checking with Sony.
Zee owns a bunch of television channels, and it bought television rights from Disney. Is this âbusiness in the ordinary courseâ?
It depends! Did Zee check with Sony if it would be fine with this big purchase? Sony says that Zee did not and that it âraised their concernsâ when it found out. But Zee says that Sonyâs concerns were raised too late and by then the deal was already finalised.
I donât understand this. If I was in the middle of a crucial merger, Iâd make sure my counterparty was on board before I signed yet another agreement with someone else. Iâd send them an email, then call them up and ask them to check their email, then call them up again and annoy them to give me an answer. I would not sign a billion dollar deal! Apparently, Zee did.
So could this be grounds for abandoning the merger? It could be! $1.4 billion is a lot of money and Zee did not even have this money. It took on debt and was hoping that Sony would pay the bill after the merger.[4] Does not look good!
The problem for Sony here is that this Disney deal took place in August 2022, a good year and half back. If Sony figured that Zee breached its contract by doing business outside the ordinary course, why did it wait? It should have abandoned the merger much sooner if this was important for them.
Sonyâs third reason is probably the easiest to evaluate if only the merger agreement was public. Sony says that Zee took on too much debt to fund the Disney deal and it now has $451 million in debt. Apparently the merger agreement defines a maximum debt threshold and this is above that.
Could this be sufficient grounds? I would think so. But I doubt the merger agreement mentions a definitive figure the way Sony is implying. If there was, Zee would have been more careful. A precise figure can be matched with your financials and is too black-and-white to ignore!
Unsaid reasons
If youâre a company thatâs signed a merger agreement and you want to terminate this merger, youâre going to get your lawyers to come up with whatever reasons they can. Youâre fine with whatever sticks. That does seem like what Sony is doing here. Its reasons to end the merger may be valid, and the company might even win in court, but what could be the real reasons that it wants to ditch the deal?
The classic reason for an acquisition or merger to not happen is buyerâs remorse. The company that is doing the spending feels in hindsight that it got a raw deal and wants to get out.
Could that be whatâs happening here? Here are some facts:
- Sony was going to invest about $1 billion into the post-merger company, and also pay $100 million separately to Subhash Chandra & family.[5]
- Zeeâs financial performance has fallen. From a post-tax profit of âš800 crore ($96 mn) in 2021 to âš250 crore ($30 mn) in 2023.
- Both Zee and the Subhash Chandra family are desperate!
Earlier in this piece I mentioned that this was mostly a merger of equals. That was before the merger agreement was signed. After the agreement, in terms of profit, Sony is at least 5X ahead. And Sony had clearly been generous to start withâit was going to invest $1.1 billion for a narrow majority (50.86%) in the new company!
Maybe Sony does still want to do the merger but it just wants a better deal.[6] It wouldâve been awkward to ask for one two years after signing the legally-binding agreement.
This is, of course, the classic self-serving reason for why someone usually wants to get out of a merger. Another reason could be that it just doesnât want the headache of dealing with someone who has been accused of stealing from both lenders and the company itself.
Would Sony have been fine with the merger if Punit Goenka, Zee and the post-merger CEO stepped down? Hereâs Subhash Chandra in an interview with Mint last week:
Some shareholders may think that if Punit stepped aside, Sony would agree to the merger. But that is not true. This was already offered to Sony. As the founding family, we wrote to them and we had decided that even if Sony is demanding Punitâs separation, we will agree to it but let us at least meet once. But they even refused to give me time for a meeting to close this discussion.
Funny! Subhash Chandra says that they were fine with having Punit Goenka step down but Sony ghosted them. The fraud stuff could very well be the reason Sony doesnât want to merge, but come on, the Subhash Chandra family has been (accused of) stealing from lenders since much before the deal. Itâs almost like a hobby.[7]
Did Sony expect different this time? Maybe fraud doesnât hit home until itâs too close for comfort.
Footnotes
[1] Iâd have loved to write about this but seems like I missed it back then. In brief what Subhash Chandra & family did was they took a loan via a subsidiary of Zee while keeping a fixed deposit of Zee as collateral. Then when the subsidiary didnât repay, the bank took away the fixed deposit.
[2] The logic here is that no matter the approvals, the counterparty wouldâve spent money to comply with the merger agreement. Adobe wanted to acquire Figma and Amazon wanted to acquire iRobot but both ended up abandoning the deals because of being unable to get approvals and still paid the termination fee.
[3] Zeeâs Russian website is dead but ironically Sonyâs website is still on. Just how important is this for Sony again?
[4] Now that the merger with Sony is probably not happening, Zee had to itself cancel its cricket rights deal with Disney.
[5] The $1 billion is an estimate. The post-merger company is to have $1.5 billion cash on hand so news reports have worked backwards to arrive at this figure.
[6] By itself, falling financial performance is almost never a material adverse change. The challenge is that youâd have to prove that there is materially adverse change within the company and itâs not just going through general economic conditions. Matt Levine, as always, has a great piece on this.
[7] My favourite financial story that I havenât written about yet is probably the Yes Bank-Dish TV episode. Dish TV is yet another Subhash Chandra & family company that a bank chased to get its money back. BTW if you or someone you know knows anything more about this episode than whatâs in the news, please get in touch!
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Zee Entertainment fundamentals have fallen over the past two years and should be valued significantly lower than Sonyâs estimated
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