The recent market slump has claimed yet another casualty. Kishore Biyani promoted private equity fund Indivision India Partners, which had picked up a 4.9% stake in Zee's DTH arm Dish TV for Rs 250 crore, has now cancelled the deal.
The reason: the Dish TV shares have crashed from a high of about Rs 175 in mid-December 2007 to end at Rs 62.95 on Friday. Dish TV is India’s largest DTH operator and commands about 67% market share in this space. ET has learnt that Zee had sent a legal notice to Indivision India Partners for backing out of a binding deal, following which both groups have now smoked the peace pipe.
The deal was announced in December last year under which Indivision India Partners was supposed to be allotted 1.25 crore equity shares of Dish TV of Re 1 each at a price of Rs 100 each, aggregating Rs 125 crore. Further, the private equity fund was to subscribe 9,615,385 warrants — each convertible into an equity share — at Rs 130 per equity share, aggregating to Rs 125 crore. The deal, when signed also raised Dish TV’s valuation to over Rs 5,000 crore. This was about Rs 1,000 crore more than its valuation if the same was calculated based on the closing price of the company’s shares on December 6, 2007.
Sources said while the deal was signed and sealed in December, the stipulated amount of Rs 250 crore had not changed hands. Sources said it was this factor that helped Indivision India to pull out of the deal as it had not paid for the transaction.
Dish TV had proposed to use the resources raised from this deal to fund its expansion plans. In fact, the company plans to raise over Rs 1,000 crore over the next two years for is growth across the country. Dish TV is currently operates in about 4,300 towns and plans to expand to about 2,000 more towns within the next two years.
Source: Economic Times