More Stories

Informist, Wednesday, Jul 31, 2024

--Zee Ent: To come out with funds deployment plan soon

--CONTEXT: Zee Ent board approved raising $239 mln via FCCBs

--Zee Ent: Fundraising aimed to ensure growth capital-ready

--CONTEXT: Zee Entertainment mgmt comments in post-earnings call

--Zee Ent: Expect advt spending by FMCG cos to pick up Oct-Mar

By Narayana Krishna

HYDERABAD - While Zee Entertainment Enterprises Ltd’s June quarter earnings look healthy, analysts are not convinced about the logic behind the company planning to raise $239 mln via foreign currency convertible bonds. At a post-earnings conference call today, several analysts questioned the "logic" behind Zee Entertainment’s fund-raising plans at this stage.

The board of Zee Entertainment Enterprises on Jul 18 approved raising funds by issuing foreign currency convertible bonds for up to $239 mln maturing in 10 years to Resonance Opportunities Fund, St John’s Wood Fund Ltd and Ebisu Global Opportunities Fund on a private placement basis.

Responding to a series of questions from analysts, Zee Entertainment’s management maintained that the FCCB issue is aimed at keeping growth capital ready in hand. The company management said the proposed fundraising will be done in tranches as and when there is an opportunity for growth. The team is working on the fund deployment plan which will be announced soon.

On the day the company board approved the fundraising plan, shares of Zee Entertainment fell nearly 9% as investors were concerned about the interest costs. Analysts today raised several questions on the need, logic and rationale for taking the FCCB route. “I was just curious about the FCCB route. Any logic or rationale behind selecting this instrument?” one analyst asked.

The management said the board favoured the FCCB route because the company wanted flexibility in drawing in funds relatively over a longer period.

“The whole idea was to fortify our balance sheet and be ready with enough resources at our disposal. But we would be very prudent in deploying these funds. FCCB is an instrument that gave us the flexibility of drawing or having multiple drawdowns in line with our deployment plan over a longer period of time,” the company said.

The management said though other instruments gave flexibility, there were limitations on drawdowns and so FCCB was chosen as the best route. 

"Fund raising by television broadcasting companies is quite rare... what is the thought process behind this?” another analyst asked.

The company management said fundraising will be undertaken mainly to ensure the availability of funds which can act as a growth capital for its growth plans, both organic and inorganic. The company team is working and fine-tuning the plan on the drawdown, the company said.

Another analyst asked how fundraising would help solve issues like competition, talent retention, distribution, costs, and tariffs?

Answering questions during the call, the company management said advertising revenue is currently subdued and is expected to rebound during Oct-Mar, aided by the festival season, as many fast moving consumer goods clients have indicated.

Today, shares of Zee Entertainment Enterprises ended at 148.67 rupees on the National Stock Exchange, up 2.4% from its previous close.  End

Edited by Saji George Titus

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.