Media baron Subhash Chandra's Zee Entertainment on Wednesday approached a corporate disputes tribunal to get Sony to honour a USD 10 billion merger deal even as the Japanese media giant vowed it will thrive in India despite the aborted merger.
Days before the Sony Group pulled the plugs on the merger following a stalemate over who will lead the merged entity, Zee group founder Chandra had written to the Finance Minister Nirmala Sitharaman, blaming market regulator Sebi for trying to "scuttle" the deal by slapping notices right in the middle of negotiations in a case of relating to alleged fund diversion by Zee promoters.
Sony had resisted the demand by Zee Chief Executive and Chandra's son Punit Goenka, who was investigated by Sebi over fraud allegations, to stay on after the merger.
In a stock exchange filing, Zee denied Sony's claims that it breached its obligations under the deal, and said it has started legal action to contest the claims in arbitration proceedings before the Singapore International Arbitration Centre.
It also approached the Mumbai-bench of the National Company Law Tribunal to get Sony to honour the deal that was preliminary agreed two years ago.
Separately, Sony's India unit head shot off a letter to its employees, assuring them the firm will thrive despite its aborted merger with Zee Entertainment Enterprises Ltd.
Zee has also initiated appropriate legal actions to contest the claims of USD 90 million (Rs 748.5 crore) filed by Sony Group before the Singapore International Arbitration Centre (SIAC), according to a regulatory update by Zee Entertainment Enterprise Ltd (ZEEL).
It asserted that Sony Group firm Culver Max and BEPL (Bangla Entertainment Pvt Ltd), which were to be merged with ZEEL, "are in default of their obligations to give effect to" and implement the scheme of merger that was sanctioned by the NCLT.
"The company approached the NCLT, Mumbai-bench, inter alia seeking directions to implement the merger scheme," ZEEL said.
The NCLT on August 10, 2023, approved the scheme of merger of ZEEL with Sony group entities Culver Max Entertainment (earlier known as Sony Pictures Networks India) and BEPL.
"The company has called upon Culver Max and BEPL to immediately withdraw the termination and confirm that they will perform their obligations to give effect to and implement the merger scheme, sanctioned by the NCLT," it noted.
Moreover, the Chandra family-promoted media entity has refuted all allegations of Sony Group of breach of the merger agreement and said the termination fee claimed by the Japanese firm is "legally untenable" and has no basis whatsoever.
It is "evaluating all available options" and basis the guidance received from its board, said a regulatory filing from Zee Entertainment Enterprise.
"The company initiated appropriate legal action to contest Culver Max and BEPL's claims in the arbitration proceedings before the SIAC," it added.
On Monday, Sony Group Corp (SGC), the Japanese parent company of Sony Picture Network India (SPNI) and BEPL, announced the termination of the USD 10 billion merger agreement with ZEEL, while seeking USD 90 million for breach of conditions besides initiating arbitration.
SGC had said ZEEL did not satisfy the merger conditions despite engaging in discussions to extend the end date for consummation of the transaction.
Replying to it, ZEEL said, "The company categorically refutes all claims and assertions made by Culver Max and BEPL regarding alleged breaches of the MCA by the company, including their claims for the termination fee, and reserves its rights in this matter".
ZEEL further said it is evaluating all available options.
This also includes "taking appropriate legal action and contesting Culver Max and BEPL's claims in the arbitration proceedings".
In the January 16 letter to the Finance Minister, Chandra alleged that Sebi was "acting with a predetermined mind", and sought steps "to safeguard the interest of the minority shareholders of ZEEL".
ZEEL and all other people, he said, have been cooperating in the investigation related to the alleged fund diversion by promoters and expressed concern over a new notice issued by the market regulator to former directors of ZEEL.
Chandra, while referring to the order passed by the appellate tribunal SAT, where the order passed by Sebi banning him and his son Puneet Goenka from holding key positions in any listed entity was challenged and was stayed, alleged that the regulator was working with a prejudiced mind.
As per the agreement, Sony had plans to invest USD 1.575 billion in the merged entity and have a majority stake of 52.93 per cent.
If the Sony-Zee merger was completed, the combined entity would have owned over 70 TV channels, two video streaming services -- ZEE5 and Sony LIV -- and two film studios -- Zee Studios and Sony Pictures Films India-- making it the largest entertainment network in the country.
In the letter to employees, SPNI Managing Director and CEO N P Singh asked them to focus on current projects, with an immediate goal to unleash the company's full potential, continuing to craft content that not only engages audiences but also boosts subscriber growth and revenues.
"As we close the chapter on our proposed merger with ZEEL, I want to take a moment to talk to you -- not just as your CEO but as someone who has been on this journey with you. This change in our plans allows us to step into a new phase of our story, which I believe is full of promise," Singh wrote in the letter.