Zee shares jump 7% as SAT clears ₹3,143cr fundraise
What's the story
Shares of Zee Entertainment Enterprises Ltd (ZEEL) jumped by 7% on Friday after the Securities Appellate Tribunal (SAT) provided interim relief in its case against the Securities and Exchange Board of India (SEBI). The tribunal stayed SEBI's order against ZEEL and allowed the company to go ahead with its proposed ₹3,143 crore preferential warrant issue to promoters.
Tribunal decision
Conditions attached to the interim relief
In addition to allowing the warrant issue, SAT also permitted ZEEL to redeem its mutual fund units for operational purposes and dividend distribution.
However, this interim relief is conditional on the company depositing the penalty imposed by SEBI.
Senior Advocate HP Ranina at the Supreme Court expressed confidence that SEBI would respect SAT's order and ZEEL would be able to proceed with its fundraising efforts.
Regulatory action
SEBI's order had serious implications for ZEEL
On July 31, SEBI had barred ZEEL from accessing the securities market for two months. The company's CEO Punit Goenka and promoter Subhash Chandra were also restrained from accessing the market for 12 months each.
The regulator imposed monetary penalties of ₹30 lakh on ZEEL, ₹58 lakh on Goenka, and ₹60 lakh on Chandra.
These penalties were to be paid within 45 days of the order.
Allegations against ZEEL
Allegations against ZEEL that led to SEBI's action
SEBI's action was based on the alleged unauthorized use and pledge of ZEEL's property in Hyderabad as security for loans taken by four Essel Group entities from Indiabulls Housing Finance Ltd.
The regulator claimed that the property was used to secure loans worth around ₹726 crore.
It also flagged the lack of necessary approvals from ZEEL's Audit Committee, Board, and shareholders for this transaction.