India's Zee Entertainment slides as insolvency admission seen delaying Sony merger

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Shares of Indian media company Zee Entertainment Enterprises Ltd sunk to a 17-month low on Thursday after the company was admitted into insolvency proceedings, possibly delaying a merger with the local unit of Japan's Sony Group Corp .

Zee had provided commitments for funding shortfalls in a debt service reserve account for Siti Networks, which had availed loans from various banks, multiple exchange filings show.The nature of financial cases pending will only delay the merger process with Sony, which is a big overhang for Zee's stock and its valuation multiples, Elara Capital analyst Karan Taurani said in a note.

In a worst-case scenario, the Zee management can settle the claims to expedite the merger process. But that seems highly unlikely for now, Taurani said, adding that he did not foresee any reason for the merger being called off.filed an application under insolvency proceedings against the company over a default of 1.5 billion rupees for a loan availed by Siti.

Reporting by Nandan Mandayam and Nallur Sethuraman and PRaveen Paramasivan in Bengaluru; Editing by Janane Venkatraman and Eileen Soreng

 

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