Sky Deutschland plans to raise E162.6m through a convertible bond and/or loan from major shareholder News Corp by January 31, after a disappointing rights issue.
On September 28, Sky announced it had sold less than two thirds of the 270 million shares it…
Sky Deutschland plans to raise E162.6m through a convertible bond and/or loan from major shareholder News Corp by January 31, after a disappointing rights issue.
On September 28, Sky announced it had sold less than two thirds of the 270 million shares it offered as part of a capital increase intended to raise E283m.
The shares were offered for E1.05 each, representing a premium to the E0.977 they were worth at close of the trading day previous to the rights issue.
News Corp, which partially backstopped the deal, bought 64% of the shares that were sold and saw its stake in Sky Deutschland increase from 45.42% to 49.9%.
RBS and UniCredit Bank are acting as joint global coordinators and joint lead managers for the capital increase.
Brian Sullivan, CEO of Sky Deutschland, said: “We are satisfied with the result of the rights offering, and would like to thank our shareholders for their confidence in Sky. We are well on track now and find ourselves in a solid position to execute on our plans and accelerate future growth.”
Sky Deutschland’s rights issue, the company’s seventh capital increase in five years, was part of plans to raise E340m by early next year to reach a critical mass of subscribers and turn a profit. To complete the financing, Sky Deutschland asked its lending bank syndicate to waive certain covenants, such as mandatory prepayments from the proceeds, on its E525m debt. “The banks have already agreed to firstly adjust the financial covenants in the credit facilities to reflect the increased investments and, secondly, have waived the mandatory prepayments from the proceeds of the rights offering. This means nothing out of the E177.4m proceeds will repay the credit facilities,” a spokesperson for Sky Deutschland told SatelliteFinance.
It is now planning to raise the remaining E162.6m through a convertible bond and/or loan from News Corp to be issued via a private placement.
On August 6, Sky Deutschland noted that its potential bond would be convertible for up to 53.9 million underlying ordinary shares taken from its contingent capital.
The unsecured subordinated bond would likely carry a coupon of 5.5-6.5% and have an initial conversion premium of 25-30% with a minimum conversion price of E1. The bond would also be subject to a 40-day holding period.
As for the loan, this would be subordinated to Sky Deutschland’s existing credit facilities, maturing at the end of March 2014, bearing an interest of 12%, which would accrue and be payable at maturity. The shareholder loan could also be converted into equity at a later date at the request of News Corporation. “The conversion of this shareholder loan would be subject to shareholder approval at an annual general meeting or an extraordinary general meeting,” the spokesperson said.
In its preliminary Q2 2010 results, Sky Deutschland reported net subscriber growth of 6,000 compared to a net subscriber loss of 7,000 in Q2 2009. This represented the first positive net growth in a Q2 since 2005. According to Sky Deutschland, it currently has approximately 2.476 million subscribers.
The company reported Q2 2010 total revenues of E236.1m, up slightly from E230.6m in Q2 2009. It also posted a negative EBITDA of E47.4m, showing a year-on-year improvement of E16m, and a quarterly net loss of E81.9m, compared to a E365.8m loss for the same period in 2009.
