Essel Group chairperson and Zee Entertainment Enterprises Limited promoter Subhash Chandra is set to lose control of the company after he announced his plan to sell 16.5% of his shares to repay loans. The company said in a statement that a portion, around 2.3%, of this sale might go to OFI Global China Fund.

“The group seeks to sell up to 16.5% stake in ZEEL to financial investors, in order to repay loan obligations to certain lenders of the group for whose benefit such shares are currently encumbered [and who have consented to such share sale by the group],” the company said. “Out of the aforesaid the group seeks to sell 2.3% stake in ZEEL to OFI Global China Fund, LLC and/or its affiliates.”

OFI Global China Fund is a private investment vehicle of the United States-based Invesco Oppenheimer Developing Markets Fund, according to Mint.

In July, the Essel Group had declared it would sell 11% of its stake in the entertainment company to Invesco Oppenheimer for Rs 4,224 crore. Out of this, 8.7% of the sale has been closed but the rest of the 2.3% of shares need to be sold. Mint was unable to verify if the 2.3% of shares that may go to OFI GLobal China Fund is a separate transaction or the same as the previous one.

As of September, the promoter group controlled 22.37% of the company’s shares, of which 96% was tied up in domestic mutual funds, foreign lenders, and financial institutions. This included the 10.7% of the shares pledged with Russian lender VTB, according to Bloomberg Quint.

After the proposed sale goes through, Essel will hold 5% of the shares in the company, “out of which encumbered holdings of the group will reduce to 1.1% of ZEEL”. The group said this announcement reaffirmed the progress made with regard to divestments “undertaken to generate adequate liquidity for the repayment process”. “The group is also working actively on further divestments including its medial non-media assets and remains confident to complete the same,” it added.

Following the announcement, Zee Entertainment’s shares closed 7.49% higher at Rs 307.15 on the Bombay Stock Exchange.

The Essel Group had an overall debt of around Rs 16,000 crore in March. Around Rs 11,000 crore was raised from mutual funds and Non-Banking Financial Companies. As a part of its initial agreement, the group agreed to sell assets to repay its lenders by the end of September.

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