Zee to raise $239 mn via FCCBs

Zee Entertainment Enterprises has received board's approval for raising funds via an issue of 10-year foreign currency convertible bonds (FCCBs) of up to $239 million, according to an exchange filing. These FCCBs would be issued to Resonance Opportunities Fund, St. John's Wood Fund Ltd. and Ebisu Global Opportunities, the company shared in a previous filing.

“This will enable the company to enhance its strategic flexibility to pursue future growth opportunities in the evolving media landscape,” the company said in a statement on June 6.

This international offering of the FCCBs will be on a private placement basis and thus these bonds will not be listed on any of the Indian or international stock exchanges. The proceeds from the issue with a maturity period of 10 years will be drawn in tranches, the company informed.

The media and entertainment company said the opening of the issue of its unsecured and unlisted convertible bonds began on July 16, offering a 5% annual coupon. Investors can convert these bonds into equity shares at a rate of ₹160.20 per share, which includes an equity premium of ₹159.20. If all FCCBs are converted, 12.46 crore equity shares, each with a face value of ₹1, will be issued. In a previous filing, the company set the floor price for the FCCBs issuance at ₹152.45 per share.

The terms and conditions such as when the bonds need to be paid back, are to be mutually decided by the company and the 'proposed' investors.

In rupee terms, the issue of the convertible bonds will raise a total amount of ₹1,997.22 crore. The ZEE board in its previous meeting had given its in-principle nod for raising funds to ₹2,000 crore in various ways including a private placement, a qualified institutions placement, and a preferential issue.

After the company’s proposed $10 billion merger with Sony Pictures Entertainment, now known as Culver Max Entertainment, fell through, shares of Zee Entertainment plummeted over 30% in a single day, marking the largest single-day drop on record. Brokerages also subsequently downgraded Zee Entertainment after the merger's cancellation. The company then announced a three-pronged strategy to restore margins by reducing costs, eliminating business overlaps, and enhancing quality. The company’s shares ended 2.95% lower at ₹155.41 on Tuesday.

For the financial year 2023-24, Zee Entertainment reported a total income of ₹2,042.56 crore, a 2.5% rise from the previous fiscal year.