Highlights
As per the scheme of demerger approved by the Hon’ble High Court of Judicature of Bombay, Zee Telefilms Limited (ZTL) has demerged its cable undertaking into Wire & Wireless India Limited (WWIL) and the regional and news broadcasting undertaking into Zee News Limited (ZNL).
The appointed date for the demerger is March 31, 2006 and the scheme has become effective on November 22, 2006.
ZTL had earlier announced the book closure date (from December 24 to 28, 2006) for determining eligibility for issuance of equity shares (consequent to the scheme of arrangement) by ZNL and WWIL.
Shareholders of ZTL would receive 45 shares of ZNL and 50 shares of WWIL for every 100 shares held in ZTL. Both companies would be listed independently, after relevant approvals from the Stock Exchange. Listing is likely in January 2007.
Demerged ZTL (including the Direct Consumer business undertaking) would continue to trade on the stock exchanges. A separate record date would be announced for the demerger of Direct Consumer Business of ZTL into ASC Enterprises Limited, to be renamed Dish TV India Limited (Dish).
Mumbai, India; December 12, 2006 – Zee Telefilms Limited (ZEE.BO, ZEE.NS) today clarified the modalities of the restructuring of its news business and cable business for the benefit of its shareholders.
Mr. Subhash Chandra, Chairman, stated, “In keeping with its philosophy of building long term shareholder value, the Board of Zee had decided to restructure the various businesses. This would strengthen long term business prospects of each individual business, by providing focused management attention. From 18th December, Zee Telefilms Limited would start trading as the demerged entity (to be renamed Zee Entertainment Enterprises Limited) and two new companies would start their journey as independently listed entities. Though the business of both WWIL and ZNL was earlier part of ZTL, they would be able to unlock greater shareholder value as independent companies.”
RECAP OF SCHEME OF DEMERGER
The Scheme of Arrangement had proposed to demerge assets and liabilities of the following undertakings of ZTL:
1. Cable distribution undertaking
2. News and regional broadcasting undertaking
3. Direct Consumer business undertaking
The appointed date for the demerger is March 31, 2006 for the cable undertaking and the news and regional undertaking, while for the direct consumer business, the appointed date is April 1, 2006.
The Company has already received approval of its demerger scheme by the Hon’ble High Court of Judicature of Bombay for the demerger of cable undertaking and news and regional undertaking. The process of getting approval for the demerger of direct consumer undertaking is underway and is expected soon.
Pursuant to the Scheme, shareholders of Zee as on the relevant record date would get shares in four separate companies, which would be independently listed on stock exchanges. They are:
1. Zee Telefilms Limited {to be renamed Zee Entertainment Enterprises Limited (ZEEL)}
1.1. ZEEL includes the global broadcasting business of ZTL, excluding the news and regional language channels.
1.2. The channels in ZEEL include Zee TV, Zee Cinema, Zee Sports, Zee Muzic, Zee Smile, Zee Jagran, Zee Premiere, Zee Classic, Zee Action, Zee Studio, Zee Caf and Zee Trendz.
1.3. ZEEL includes the international broadcasting business of Zee in USA, Europe, Africa, Middle East and in Asia Pacific.
1.4. It includes investments in Zee Turner India Limited, ETC Networks Limited and Ten Sports channel.
1.5. ZEEL has more than 900 employees.
1.6. ZEEL had revenues of Rs 10.5 billion in FY2006.
2. Zee News Limited (ZNL)
2.1. ZNL includes the broadcasting business of ZTL, pertaining to the news and regional language channels.
2.2. The channels in ZNL include Zee News, Zee Business, Zee Marathi, Zee Bangla, Zee Punjabi, Zee Gujarati, Zee Telugu, Zee Kannada and 24 Ghante.
2.3. It also supplies content to the international broadcasting business of Zee in USA, Europe, Africa, Middle East and in Asia Pacific.
2.4. ZNL has more than 900 employees.
2.5. ZNL had revenues of Rs 2.0 billion in FY2006.
3. Wire and Wireless India Limited (WWIL)
3.1. WWIL includes the cable distribution business of ZTL, which was earlier under Siticable Network Limited. WWIL is the largest multi system operator (MSO) in the country and has a connectivity of 6.7 million homes.
3.2. WWIL operates 52 headends in 35 cities across the country. It has seven regional offices and over 500 employees.
3.3. WWIL is embarking on a project of converting the analogue cable homes in India to digital cable. It plans to expand from current 35 cities to 66 cities in the next two years.
3.4. WWIL had revenues of Rs 1.5 billion in FY2006. Revenues of WWIL are expected to grow very rapidly in the coming years due to digitization of cable and acquisition of last mile control.
4. ASC Enterprises Limited {to be renamed Dish TV India Limited (Dish)}
4.1. Dish includes the direct to home satellite broadcasting business. It is the first DTH operator in India and currently the largest, with 1.6 million subscribers.
4.2. Dish has revolutionized television viewing in India through its high quality digital service delivered directly to consumers’ home. Not only it provides 160 digital channels, it also offers many value added services to its consumers like electronic programme guide, parental lock facility, ability to record programmes, gaming channels, movies on demand etc.
4.3. Dish is adding 30,000 subscribers every week and is targeting to reach 2.3 million subscribers by March 2007.
4.4. Dish had revenues of Rs 0.8 billion in FY2006 and has over 800 employees.
SHAREHOLDING IN DEMERGED ENTITIES
Taking an example of a shareholder having 100 shares in ZTL, the following illustrates how the new shares would be allotted:
a) ZEEL: 100 shares held in ZTL would continue as 100 shares in demerged ZTL (ZEEL), in addition to entitlement for new shares as illustrated below.
b) ZNL: 100 shares held in ZTL would entitle shareholders for 137 shares in demerged ZNL. Subsequently, ZNL would reduce its share capital by 67% and therefore, 100 shares in ZTL would translate into net 45 shares in ZNL, implying effective shareholding of 80%.
c) WWIL: 100 shares held in ZTL would entitle shareholders for 50 shares in demerged WWIL, implying effective shareholding of 100%.
d) Dish: 100 shares held in ZTL would entitle shareholders for 230 shares in demerged ASC Enterprises Limited (Dish). Subsequently, Dish would reduce its share capital by 75% and therefore, 100 shares in ZTL would translate into net 57 shares in Dish, implying effective shareholding of 57%.
BENEFITS TO SHAREHOLDERS
The shareholders of ZTL would continue to participate in the growth and progress of ZTL, which is one of the largest media companies in South Asia, with a global presence. They would continue to hold the same number of shares as they currently hold in ZTL.
In addition to that, they would receive separate shares in three demerged entities, which will allow them to participate individually as well as collectively in the growth area of Cable Distribution, Direct to Home broadcasting, and News and Regional channels.
The shares of the resulting companies would be listed on the Stock Exchanges in India, where ZTL shares are currently listed, thus providing liquidity to all shareholders.
This will unlock value for all shareholders as they can participate directly in all the businesses that ZTL has nurtured and brought to their current stature.