Lenders not to classify loans against shares as "default":

Lenders not to classify loans against shares as "default": Essel (Eds: Leads DCM31; adds details) New Delhi/Mumbai, Jan 27 (PT) Lenders who are owed Rs 13,000 crore by the financially-troubled promoters of Essel Group will not classify the loans against shares as "default" despite the scrip shedding a fourth of the value in Friday's trade, the group said Sunday. Two days after chairman Subhash Chandra disclosed that he is passing through financial difficulties and blamed "negative forces" for hammering the stock prices, Essel group officials held a meeting with mutual funds and non-bank lenders Sunday, where an "agreement" was reached.

As per the pact, lenders said they have a "belief" in the intrinsic value of Zee Entertainment Enterprises (ZEEL) and Dish TV and it was decided that "there will not be any event of default declared due to the steep fall in price", according to a statement by the group late Sunday evening. The promoters have borrowed over Rs 13,000 crore in loans against shares from the lenders by pledging their holdings in the two listed entities of the group, including the flagship ZEEL. The money was borrowed to be invested in other group initiatives.

In the letter issued Friday evening, Chandra said many of the bets taken by him in new businesses have gone sour and had admitted to an inability to rollover the borrowings in wake of the IL&FS crisis. Apologising to lenders, he had said the infrastructure business alone has losses of up to Rs 5,000 crore.

After the meeting between the group officials and lenders Sunday, it was decided that there will be a synergy and cooperation between the two leading to a "unified approach", the statement said. It also said that the lenders draw "comfort" from reiteration by the promoters for a speedy resolution through a strategic sale in a time bound manner.

"We have always believed in the intrinsic value of ZEE Entertainment and most above, the sheer value system with which its promoters function. "I am very glad with the outcome of the meeting, which enabled us to arrive at a consensus, in the interest of all stakeholders," chief executive of Aditya Birla Sun Life AMC, A Balasubramanian, was quoted as saying.

Mutual fund houses, including Aditya Birla, HDFC, Franklin Templeton, ICICI Prudential and SBI Mutual Fund, have an outstanding of over Rs 6,000 crore from the promoters of Essel group in loans against shares. The non-bank lenders account for the remaining to make it into a Rs 13,000-crore outstanding.

"It was felt that there is no need to panic as there is tremendous underlying value in the two companies (ZEEL and Dish TV), the promoters also have an established track record of running the business," a source privy to discussions at the meeting told PTI. Asked about the disclosure of financial difficulties by Chandra, the source said the promoters are facing troubles but the businesses like infra and energy have operational underlying assets, which is important for the lenders.

"We have always valued their (lenders) immense trust and faith sown in us and the positive and progressive outcome of the meeting, is a true example of the same," Chandra said in the statement. It can be noted ZEEL stock has shed 26 per cent in the last two trading sessions, especially after a media report which said the group's name may figure in a demonetisation- linked probe for deposits of up to Rs 3,000 crore.

In an open letter the same evening, Chandra had blamed a "negative force" hammering the stock and also trying to "sabotage" his plans to raise money by halving promoter holding in ZEEL to pay back the lenders, which was first announced in November. He had also urged lenders "not to react in an anarchical manner and to maintain patience, till the process of ZEEL stake sale is completed".

ZEEL managing director and chief executive Punit Goenka is scheduled to hold a call with analysts Monday morning before start of trade..