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Invesco Actions are Motivated and Foreign to Corporate Governance Issues, Says Zee

Zee Entertainment Enterprise Ltd (ZEEL) said on Wednesday that Invesco’s actions over the past few weeks against the company and its board of directors were motivated and completely unrelated to the issue of corporate governance. Refuting allegations made by its sole shareholder Invesco in his open letters to ZEEL shareholders on Monday in support of their request for the dismissal of chief executive and CEO Punit Goenka, he said the comments were “unwarranted and incorrect” and urged him ” to stop publishing half the truths about the proposed deal. “

Regarding its proposed merger with Sony Picture Networks India (SPNI), Zee Entertainment Enterprise Ltd said it appreciated Invesco’s need for information to assess the proposed deal. was disclosed by her on September 22, 2021. “It has also been revealed that we are in the process of negotiating definitive deals with Sony and that we will approach all of the company’s shareholders (including Invesco) for their approval, as required applicable law. All shareholders, including Invesco, will have the opportunity to assess and review the entire transaction at this stage, ”ZEEL said.

Invesco raised questions about the merger with SPNI and said the announcement “would offer an additional 2% capital to the founding family via a non-compete that seems totally unwarranted, while also providing a path for the founding family to grow. its participation from 4 percent to 20 percent via methods that remain completely opaque ”. In response, ZEEL said that instead of such non-compete obligations assumed by the current promoter group, Sony’s promoters will transfer around 2.11% of the shares of the merged company to the promoter group. “We would like to stress here that this will be a secondary transfer from the promoters of Sony (not a main show) and, therefore, will not be dilutive for any of the shareholders of the Company as it is a private agreement between two shareholders, It said.

Regarding the increase of the promoter’s stake in the merged entity, ZEEL said that the public announcement published by the company made it clear that “the promoter’s family is free to increase its stake from 4% to 20% currently, in a manner that is in accordance with applicable law, indicating that the promoter’s interest in the merged entity will be capped at 20 percent. According to ZEEL, Invesco’s actions over the past few weeks, such as writing open letters against the company and the board, have given “the board of directors reason to believe their actions are motivated.” by concerns totally unrelated to any question of corporate governance. “We are appalled that in the open letter, Invesco cast unfounded slander on the management of the company and made comments regarding the ‘permissive culture’ of the board of directors, ZEEL said.

In addition, five of the six existing independent directors on ZEEL’s board of directors were appointed after Invesco’s investment in 2019 and the views of the investment firm were “viewed positively” at the time. of these appointments. Regarding Invesco’s request to convene an extraordinary general meeting of the company, ZEEL said the matter (including with respect to the validity of the requisition notice) is pending in the judicial forum and “we have the utmost faith and respect for the judiciary. ”“ Unlike Invesco, we will refrain from commenting on the validity / legality of Invesco’s requisition while the matter remains pending, ”the company said. ZEEL also challenged Invesco’s requisition before the Bombay High Court, filing a civil action.

Invesco and OFI Global China Fund LLC hold a 17.88% stake in ZEEL and have pushed for an extraordinary general meeting (EGM) to discuss various issues, including the removal of CEO Punit Goenka and the appointment of his candidates to the board of directors of the company. Earlier today, Invesco said it had tried to facilitate a possible deal between Reliance and the company, but refuted claims it requested the transaction at a lower valuation.

Invesco’s latest statement comes a day after Goenka told the company’s board of directors that Invesco presented in February a proposal to merge with certain entities owned by a large Indian group (strategic group) with an inflated valuation. “at least Rs 10,000 crore”. In a statement released on Wednesday, Invesco mentioned that Reliance was the big Indian group. ZEEL, in its filing on Tuesday, had not disclosed the name of the group.

“We wish to clarify that the potential transaction proposed by Reliance (the ” Strategic Group ” referenced but not disclosed in the communication of October 12, 2021 by Zee) was negotiated by and between Reliance and Goenka and other associates in the family from the developer of Zee, “said Invesco. Hours after Invesco appointed Reliance Industries, the company headed by Mukesh Ambani said it had made a proposal a few months ago to merge its media properties with Zee , but abandoned the offer due to differences over the participation of the founders of Zee.

Reliance Industries, in a statement, said that Invesco, in February / March of this year, helped organize discussions with Goenka, a founding family member and CEO of Zee. “We had made a broad proposal to merge our media properties with Zee at fair valuations” and wanted Goenka to continue as managing director and be entitled to ESOPs with other executives, “he said.” However, disputes arose between Goenka and Invesco regarding a requirement by the founding family to increase its participation by subscribing to BSA. Investors seemed to be of the view that the founders could always increase their stake through market purchases, ”said RIL.

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