In a rebuttal to Invesco’s open letter dated October 11 to ZEE’s shareholders, ZEE said that some of the comments in the open letter were “unjustified and incorrect”.
ZEE said that the issues that Invesco may have had with the Sony deal are unfounded as it will not be dilutive to any of the shareholders of the company.
Invesco had raised concerns on the 2% additional shares from Sony promoters to the Goenka family as part of a non-compete fee. ZEE said that as SPN will become the majority shareholder, they have agreed to transfer 2.11% shared from their kitty to the erstwhile promoters of ZEE to not engage in any competing business with the merged company. “We would like to highlight here that this will be a secondary transfer from the promoters of Sony (not a primary issuance) and, accordingly, will not be dilutive to any of the shareholders of the company as it is a private arrangement between two shareholders,” ZEE informed the bourses.
The company also said that it disclosed this arrangement to all the shareholders to be fully transparent and will seek their approval at the appropriate stage as is mandated by the existing applicable laws.
Further, it pointed out that the very deal which Invesco had presented, the promoter group was being offered 3.99% shareholding of the merged entity i.e. no dilution in the existing stake of the promoter group of the company, and Goenka was further offered ESOPs —with no vesting conditions — representing approx. 4% of the merged entity.
“As such, we believe that Invesco’s stance in their open letter that they will ‘firmly oppose’ any strategic deal structure that ‘unfairly rewards’ select shareholders, such as the promoter family, at the expense of ordinary shareholders, runs contrary to the very deal Invesco was itself proposing only a few months ago,” ZEE said.
The company also said that Invesco’s lack of transparency is also borne out from the fact that, until ZEE disclosed about the proposed deal brought by Invesco, the largest shareholder did not disclose the fact that they were negotiating a deal on behalf of the company without any authority, even while criticising the Sony deal by way of the open letter.
ZEE further said that Invesco and all the other shareholders have been well aware of all of the matters dealt with in the SEBI advisory matter and that Invesco has been working alongside the company is taking and recommending corrective measures all along.
The company further pointed out that despite being fully aware of all matters, Invesco chose to vote in favour of the re-appointment of Goenka as the MD and CEO, as recently as September 2020 and had also insisted on him being the MD and CEO of the merged entity, in the deal being proposed by Invesco a few months ago.
“All these facts and Invesco’s silence as regards these issues in its requisition notice gives us reason to believe that Invesco’s recent actions are inconsistent with their past behaviour, and have been undertaken as an afterthought after various investors and analysts have sought to understand the rationale behind Invesco’s actions of these past few weeks,” ZEE said.