India: Insolvency case against Videocon Industries to delay Videocon-Dish TV merger

The combined entity called Dish Videocon Ltd would be positioned as the leading DTH operator in the country. Photo: Indranil Bhoumik/ Mint

Direct-to-home (DTH) operator Dish TV India Ltd on Thursday pointed to the ongoing insolvency proceedings against Videocon group in the context of the delay in its planned merger with Videocon d2h.

Dish TV and Videocon d2h had announced a merger in November 2016.

Earlier, the company had said it expects the transaction to close by 27 December. In a 22 December filing, the company told exchanges that the necessary filings around the deal closure would be delayed further, without citing any reason for the delay.

In its latest stock exchange filing on Thursday, Dish TV said, “It has come to our knowledge that certain entities belonging to the Videocon group, including the promoters of Videocon d2h Ltd, have become subject to insolvency and/or enforcement proceedings by lenders. In light of the foregoing, the company is evaluating if there is any impact of the same on its rights and obligations under the definitive agreements and consequential effects on the transactions contemplated thereunder.”

Dish TV added that it has asked advisers to the transaction to evaluate the position and advise the company with their findings within 60 days.

Lenders have referred Videocon Industries to the National Company Law Tribunal for resolution under the Insolvency and Bankruptcy Code. The petition is yet to be admitted by the court.

The proceedings come at a time when the deal had reached its final stage.

In a letter dated 15 December, the information and broadcasting (I&B) ministry approved the request for the completion of merger between the two companies, Zee group-owned Dish TV said in a statement to stock exchanges last month.

“This paves the way for the creation of the largest listed media company in India, taking into consideration the last reported revenue and Ebitda numbers of the two DTH players on a pro-forma basis,” the company had said in the statement.

As of 30 September, the two had a combined subscriber base of 29 million.

The Dish TV and Videocon d2h merger announcement initiated a phase of consolidation in the DTH market. Recently, Reliance Communications Ltd sold its DTH arm to New Delhi-based Patel Technologies and Veecon Media Ltd.

In December, Bharti Airtel sold a 20% stake in its DTH arm to private equity firm Warburg Pincus for $350 million as the company sought to cut debt.

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