In a major move to raise funds, the Subhash Chandra group has finalised plans to pledge equity shares of Zee Telefilms Ltd with the Zurich-based Credit Suisse First Boston Corporation (CSFBC) for a three-year term loan of $40 million.
According to the plans, Delgrada Ltd, a Mauritius-based overseas corporate body (OCB) owned by Mr Subhash Chandra will pledge five crore equity shares of Zee Telefilms, having a face value of Re 1 each, with Credit Suisse First Boston, Singapore, a wholly-owned subsidiary of the Zurich-based global banking and insurance giant.
As per the provisions laid down in the plan, in case the OCB is unable to repay the loans within the stipulated time-frame of three years, CSFB will have the right to invoke the pledge and acquire ownership of the equity shares paving the way for having a substantial ownership in one of India's premier media and television companies.
The company has already received a formal clearance for the proposed transaction from the Reserve Bank of India subject to a mandatory approval from the Foreign Investment Promotion Board (FIPB) in the event of invocation of the pledge by CSFB because the issue involves change in foreign ownership of equity shares.
The company has approached the FIPB for prior approval of the proposed transfer of ownership of equities from the present owner, Delgrada Ltd to CSFB, Singapore, along with a request for an extended three-year validity of the approval. The normal validity for all FIPB approvals is two years.