The Essel Group has finally announced plans to sell 16.5% stake in Zee Entertainment Enterprises Ltd (ZEEL) to financial investors.

"The group seeks to sell up to 16.5% stake in ZEEL to financial investors in order to repay loan obligations to certain lenders for whose benefit such shares are currently encumbered (and who have consented to such share sale by the group)," it said in a statement. "Out of the aforesaid, the group seeks to sell 2.3% stake in ZEEL to OFI Global China Fund LLC and/or its affiliates," the group said adding that pursuant to these transactions, the overall holdings of group in ZEEL will be 5% out of which encumbered holdings of the group will reduce to 1.1% of ZEEL.

"This development reaffirms the group's positive progress on its overall asset divestment approach, undertaken to generate adequate liquidity for the repayment process. The group is also working actively on further divestments including its media/non-media assets and remains confident to complete the same," it said.

Last week, Brickwork Ratings revised its outlook for ZEEL's 6% cumulative redeemable non-convertible preference shares with outstanding of Rs 1,210.16 crore. The rating was revised from AAA with negative implications to AA-plus with negative implications.

Brickwork said the downgrade factors in deteriorating financial flexibility of the group marked by an increased pledge of promoter holding, continuous volatility in share price movement resulting in a substantial decline in market capitalisation, and the promoter group's inability to repay full debt against pledge of company shares as per committed timelines.

There have also been reports that media baron Subhash Chandra could lose control of ZEEL as a group of asset managers, non-bank lenders and foreign portfolio investors -- which had extended loans to Zee's promoter group companies against share pledges -- plans to put their pledged shares in an escrow account in preparation for a sale.

Large investors like Sony Corporation and Rupert Murdoch's News Corporation have reportedly shown interest to buy Zee's shares that are to be put up for sale in the escrow account.