Zee releases point-by-point rebuttal to Invesco's open letter

In the latest statutory filing on October 13, Zee responded to Invesco’s open letter with a point-by-point rebuttal to the issues raised by the largest investor in the company.

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Invesco had on October 11 raised apprehensions related to non-compete fee and the possibility of increasing the promoter group's stake to 20% in the proposed Zee-Sony merged entity.

Regarding the non-compete fee, Zee noted that the transfer of 2.11% shares in merged entity to Zee will be a "secondary transfer from the promoters of Sony", and will "not be dilutive to any of the shareholders of the company".

On the possibility of increasing the promoter group's stake from four to 20%, Zee pointed out that "there is no right provided to the promoters to increase their stake".

"Any increase in stake of the promoters, if any, would take place in the manner and at prices that are permissible under applicable laws, if the promoters chose to increase their stake," it clarified.

Zee, while referring to the potential merger deal with a strategic group that was proposed by Invesco in February 2021, said it offered a 3.99% shareholding to the promoter group along with 4% of the shareholding to MD and CEO Punit Goenka in form of employee stock options (ESOPs).

"Accordingly, the existing promoter group of the Company along with Mr. Goenka would have held up to 7-8% in 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," it said.

Zee said the shareholder group is not motivated by concerns related to any corporate governance issue, but "by the events that transpired during February-April 2021". The company referred to the period when Invesco felicitated unsuccessful merger talks between Zee and Reliance Industries.

While appreciating Invesco's demand on the need to evaluate the proposed deal with Sony, Zee said that the shareholder should "stop publishing half truths" about the proposed merger.

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