Zee Entertainment Enterprises on Tuesday said that the company believed that the claims (made by Culver Max Entertainment) are not tenable. It noted that the claims put up by Culver Max Entertainment won’t have any material on the company.
In January, Culver Max Entertainment (previously Sony Pictures Network India) had called off the $10-billion merger with ZEEL after it claimed that Zee failed to meet some financial terms of the deal and come up with a plan to address them. Japan-based Sony Group Corporation (SGC) said ZEEL did not satisfy the merger conditions and initiated arbitration proceedings before SIAC claiming $90 million (around Rs 748.5 cr) as a termination fee.
Sony’s notice said Zee had “failed to take commercially reasonable” efforts to meet some financial thresholds, including with regards to cash availability, while a “lack of commercial prudence” by the Indian network contributed to its decision.
Zee, in reply, denied the allegations in a letter to Sony and accused the Japanese company of “bad faith” in calling off the merger.
Giving an update on the development and its impact, Zee, in its Q3 results, said: “The management believes the claims against the company, including towards termination fee is not tenable, and does not expect any material impact on the company.”
Earlier, Subhash Chandra, chairman emeritus of Zee Entertainment Enterprises, had said Sony intentionally prevented a merger despite the Zee promoters’ offer – during extended negotiations – to have Punit Goenka step aside from the chief executive’s post. Chandra said Zee intends to sue the Japanese company for damages.
Last Friday, Mad Men Film Ventures, a shareholder of Zee Entertainment Enterprises, filed a fresh application in the National Company Law Tribunal (NCLT) seeking an order to refrain Sony from proceeding contrary to the NCLT’s earlier decision sanctioning merger of the two media companies.
The termination notice came months after the Mumbai bench of NCLT on August 10, 2023 approved the scheme of merger of ZEEL with Sony group entities.
In its fresh plea, Mad Men Film Ventures sought the Mumbai bench of NCLT’s urgent intervention to restrain Sony Pictures India Networks from proceedings against the tribunal’s order dated August 10 as the matter is scheduled for hearing on March 12.
Mad Man Film in its application stated that Sony cannot pre-empt proceedings pending before this court.
On January 30, Mad Men Film Ventures had filed an application in NCLT seeking the enforcement of the merger scheme.
On February 4, Sony Pictures approached the Singapore International Arbitration Centre (SIAC) seeking directions to prevent ZEEL from seeking legal remedies from other legal forums, including the NCLT.
After SIAC rejected Sony’s plea, Mad Man Film again approached the NCLT seeking an urgent order to ensure that any order passed by any other forum concerning the Zee-Sony merger would be subject to the orders of the tribunal.