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Star to offload 3% stake in Zee

Rumi Dutta & Baburajan K

Star TV has decided to offload a major portion of its 3.9 per cent holding in Zee Telefilms. The HongKong-based media major has put in a proposal to Zee to sell around 3 per cent stake.

Star has offered Zee the stake as its promoters have the first right of refusal. Only if Subhash Chandra refuses to pick up the shares can Star sell it in the open market.

However, it is not known whether the stake transfer will be at the market price (now ruling at around Rs 167) or whether Star will seek a fresh valuation.

Confirming this, senior executives at Zee Telefilms told Business Standard: "We have received the offer from Star TV to buy out their holding in Zee Telefilms. But it's not their entire stake, only 3 per cent. We are looking at buying them out, though no final decision on this has yet been taken," they added.

Star declined to comment on the issue. "We have asked for certain clarifications from Star and are expecting their response shortly," sources said.

According to Zee Telefilms, when the shares were allotted to the company, it was classified as an allotment to a foreign investor. However, when the shares were dematerialised, the holding was classified under "Indian company" and dividends were being paid in rupees.

Zee Telefilms initially had three 50:50 joint ventures with Star TV: Siticable, Programme Asia Trading Company and Winter Heath (the holding company of Asia Today).

Zee, in March 2000, acquired Star's 50 per cent holding in all the three ventures for $290 million of which 50 per cent was paid in stock by allotting a 3.9 per cent stake in Zee Telefilms to Star TV.

As per the equity holding pattern of Zee Telefilms on March 31, 2002, the Indian promoters hold 23.32 per cent and the foreign promoters hold 29.46 per cent.

While the foreign institutional investors holding is 26.77 per cent, mutual funds and the Unit Trust of India, banks and financial institutions, private corporate bodies, the Indian public, and NRIs/OCBs hold 6.36 per cent, 0.75 per cent, 6.14 per cent, 6.51 per cent and 0.69 per cent, respectively.

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