Subhash Chandra of India, Chairman of Zee Entertainment Enterprises Ltd and the Essei Group of Companies, holds The Directorate Award during the 39th International Emmy Awards November 21, 2011 in New York.STAN HONDA/AFP/Getty Images

Zee Entertainment's creditors hope that a personal guarantee that they have obtained from group chairman Subhash Chandra will ensure the smooth implementation of a share sale programme to recover the dues.

The lenders sought Subhash Chandra's "irrevocable and unconditional" personal guarantee after a hard bargain to prevent the media company's default, according to media reports.

Reports about the deal buoyed Zee shares on the stock market on Tuesday, February 5. On National Stock Exchange (NSE), the share of Zee Entertainment that opened at Rs 343 rose by Rs 16.90 or 4.86 percent to close at Rs 365.35. The share has come off its 52-week low of Rs 288.30 that it hit on January 25.

The agreement gives a committee of lenders (CoL) more powers and greater control over the developments in the company as the Zee group owes Rs 13,500 crore to the lenders. The debt is secured by the shares of listed firms including Zee Entertainment and Dish TV.

A Zee statement said: "As communicated through our official statement issued on February 3, the lenders have agreed that there will not be any event of default declared, due to the movement in the stock price of Essel Group's listed corporate entities, giving Essel Group the required level of time to complete the strategic sale process of its key assets without any compromise on the value. Any additional terms pertaining to the agreement cannot be shared since we are bound by a confidentiality agreement."

The agreement prevents Zee from offloading the pledged shares despite a huge slide in the prices of the securities towards the end of last month.

The agreement terms give the lenders a greater say, upside benefit from the proposed strategic sale, more cover and personal guarantee, a report in the Business Standard says.

The stock market regulator Securities and Exchange Board of India (Sebi) has been informed of the deal by the Association of Mutual Funds in India (Amfi) that represents the country's mutual fund industry.

Mutual fund companies like Aditya Birla Sun Life, HDFC, Franklin Templeton, and ICICI Prudential are the major lenders of Zee.

Sebi has instructed the creditors to ensure that the interests of the investors in the mutual funds are kept in mind.

A sharp drop in Zee group shares on January 25 had put the lenders in a spot.

"Invoking and liquidation of pledged shares would have caused the shares to tumble further. At the same time, holding on to the shares would have raised the risk of default. The formal agreement with Zee gives us more control. We are hopeful that they will be able to conduct a strategic sale at fair value," a report quotes a mutual fund official as saying.

Zee will have to enter into a definitive agreement for the proposed sale before July 31 and completed the transaction before September 30. Zee will set up an escrow account for the transaction which the lenders will oversee to ensure the sale proceeds are properly utilized.