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Zee hunt for ally heralds good tidings for scrip

Sangita Shah

The Zee Telefilms share has been on an overdrive since the past couple of weeks. The counter has risen from Rs 68-odd in the last week of July to wind up at Rs 110.05 on the Bombay Stock Exchange Thursday.

The reason for the upswing, dealers said, is the declared intention of Zee promoters to offload some stake in favour of a strategic partner.

The bourses have been feverishly speculating on the probable strategic investor in the company for some time now The latest name to be touted is of the US-based Turner Broadcasting Systems Inc, an AOL-Time Warner Company.

Earlier whispers focussed on names such as European new economy major Vivendi, US' Liberty Media and a host of others. And each such tattle has bought happy tidings for the beleaguered stock.

According to observers, the buzz on induction of Vivendi or Liberty Media may be closer to truth because UBS Warburg, which is advising Zee on the matter, is known to have business associations with Vivendi and Liberty Media.

The European arm of UBS Warburg has handled a mandate from Vivendi, while the US arm had bagged a mandate from Liberty Media last year for one of its group companies.

Zee officials did not divulge details of the induction process but said the company was committed to roping in a partner.

Turner Broadcasting is a major producer of news and entertainment product around the world and the leading provider of programming for the basic cable industry. It also has interests in professional sports and real estate and employs more than 10,000 people worldwide.

Turner's network include CNN, one of the world's most respected sources for news and information. Turner is also home to familiar entertainment networks such as TBS Superstation, TNT, Cartoon Network, and Turner Classic Movies as well as specialised networks such as Turner South and Boomerang.

Last week, the promoters sold 2.5 million shares in Zee for about Rs 250-300 million to repay outstanding loans. This was the second sale of Zee equity by the promoters in less than two months.

The promoters had early last month, executed a sale of 5 million shares, or 1.2 per cent of the equity of Zee for an estimated Rs 600 million. The proceeds were used to repay part of the loan.

The repayment of about Rs 250-300 million should bring down the company's dues to Rs 750-800 million. The promoters had originally taken loans of Rs 2.20 billion. This was brought down to Rs 110 levels recently.

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