The Zee group has sounded out leading merchant bankers on an unstructured debt issue for its 100% subsidiary Asia today Ltd. (ATL) The issue size is slated to be around US $ 25 m (Rs 1.1 bn). However, the interest rate offered is not known.
This could be one fallout of the media conglomerate reducing the size of its ADR issue from the earlier planned size of $ 1.5 bn. The group is also keen on offloading a 10% stake in its cable venture Siticable.
The group had earlier planned to set up an optical fibre network (as opposed to co–axial fibre network through which it relays cable currently) through which it would offer Internet access to residents of Colaba, one of the up market areas in Mumbai. The company had planned subscription rates of Rs 1200–Rs 1500 per subscriber home for offering this service. However, this has been delayed and would be in place only six months later at the earliest.
However, the fact remains that a debt issue is a rarity in the media industry. This is because so far banks and financial institutions have been hesitant to lend to the industry. The industry itself has found it easier to fund its expansion through high premium issues since the window of opportunity that the capital market has presented in recent times has been relatively more lucrative. If the issue, were to go through it could allow merchant bankers to suggest this route for more media companies since the capital markets continue to remain bad and do not seem in a mood to accept high premium issues irrespective of the industry.
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