MUMBAI: Zee Telefilms Ltd has decided to exit from Padmalaya following the controversial transfer of shares in Padmalaya Telefilms Ltd (PTL).

That is if the deal goes through. Zee has signed a memorandum of understanding (MoU) with the promoters of the Padmalaya companies to sell its entire 64 per cent stake in Padmalaya Enterprises Private Ltd. PEPL held a 50.3 per cent controlling stake in PTL, a listed company.

Zee had threatened to take legal action against the PEPL promoters for "misappropriation of substantial shares" that its subsidiary PEPL held in PTL. But midway Zee decided to make an offer to buy out the founder-promoters stake in PEPL. "They proposed to buy out our entire holding in PEPL. We then made an offer to buy out Zee's stake," says Padmalaya companies founder-promoter GA Seshagiri Rao.

Zee is still negotiating with the Padmalaya promoters the price at which it would sell its entire holding in PEPL. The Padmalaya founder-promoters have offered to purchase Zee's entire investment in PEPL in exchange for immovable property. The shortfall, if any, of this investment and other dues will be provided on completion of the deal.

Zee had earlier accused Rao, along with his relatives, of pledging PEPL's shares in PTL to raise loans without the knowledge of the board. As a result of the misappropriation, PEPL's holding in PTL has dropped from 50.3 per cent to about 20 per cent. Zee's indirect interest in PTL had, as a result, fallen from 33 per cent to around 13 per cent.