ZEE Entertainment to Raise $239M with 10-Year FCCBs: Approved by Board, Involving Major Funds!

The board of directors of Zee Entertainment Enterprises has approved raising funds by issuing foreign currency convertible bonds (FCCBs) of up to $239 million maturing in 10 years on a private placement basis to Resonance

Opportunities Fund, St John’s Wood Fund Ltd, and Ebisu Global Opportunities Fund, Zee said in a letter to the exchanges. This will be done on the terms and conditions as may be mutually decided between the company and the proposed investors, it added.

This means that Zee plans to get $239 million by selling unsecured, unlisted FCCBs with a 5% coupon. These bonds won’t be traded on the public stock exchanges and will pay an interest rate of 5% each year. The company doesn’t need to provide any assets as security for these bonds.

They are issued in a currency that is not the local currency of the company. Investors can choose to convert these bonds into shares of the company at a later date, and these bonds are being sold directly to investors like Resonance Opportunities Fund, St John’s Wood Fund and Ebisu Global Opportunities Fund. The details of the bonds, like when they need to be paid back, are to be agreed upon by the company and these investors.

The sale of these bonds starts on Tuesday. Investors who choose to convert their bonds into shares will pay ₹160.20 per share. This price includes an equity premium of ₹159.20, meaning the basic value of the share is ₹1 and the extra charge (premium) for conversion is ₹159.20.

Following the collapse of its merger with Sony Pictures Entertainment in February, Zee said it was charting a three-pronged strategy focused on reducing costs, eliminating business overlaps and enhancing quality to restore margins.

For the quarter ended March, Zee reported a net profit of ₹13.35 crore, rebounding from a loss of ₹196 crore in the year-ago period, with total income rising 3% to ₹2,185 crore.