Zee Telefilms, alarmed by the sharp plunge in its share price, has decided to retract from the advances of Rs 220 crore provided to the group investment companies for acquisition of stakes in media companies. The acquisitions include 28.5 per cent holding in AB Corp and 15 per cent in B4U. The group’s investment companies have given an undertaking to return advances, with interest, to Zee Telefilms at the earliest but not later than June 30, 2001.
The holdings in media companies will be retained by the group investment companies and will not be transferred to Zee Telefilms even at a future date. The Zee stock price declined further by 16 per cent and touched a new 52-week low of Rs 84.50 on sustained selling. With this, the share price has declined by about 40 per cent in the last three trading sessions.
Zee Network, which is a part of the Essel group, has advanced Rs 220 crore to the group’s investment companies for acquiring stakes in media companies. These acquisitions are not directly made by Zee Telefilms or its subsidiaries but by the Essel group, it has been clarified.
Zee Telefilms admits that concerns have been expressed on its corporate governance. To correct the situation, the company’s board is being reconstituted by inducting independent and eminent professionals.
The newly constituted board will create the framework for instilling best corporate governance practices, which will include investment and portfolio direction.