A legal bid by two minority shareholders in On Digital Media (ODM), the parent company of South African satellite TV provider TopTV, to thwart the company’s business rescue plan has ended after the two withdrew their case.
The decision means that…
A legal bid by two minority shareholders in On Digital Media (ODM), the parent company of South African satellite TV provider TopTV, to thwart the company’s business rescue plan has ended after the two withdrew their case.
The decision means that Peter van den Steen, the business rescue practitioner, can implement the plan that sees StarTimes, a China-based technology company with operations in Africa, acquire a 20% stake in the company (with an economic interest of 65%) as well as pay off its creditors who are owed in the region of R1.4bn (US$156m).
StarTimes announced on 31 October that it is to relaunch TopTV as StarSat despite the minority shareholders’ protests that they had been excluded from the restructuring process. However, the relaunch relied on van den Steen implementing the business rescue plan.
First National Media Investment Holdings, one of the founders of ODM and holder of a 20.4% stake, and individual investor Mergan Moodley, with a 0.7% holding, abandoned their bid after the struggling media group’s largest shareholder and government backed investment company, Industrial Development Corporation, exercised an option on FNMIH’s shareholding.
According to local reports, FNMIH owed IDC around R200m after it defaulted on a first preference share subscription agreement it had taken out in 2010 in order to fund its acquisition of shares in ODM . As part of the settlement for this, IDC had the option to take control of FNMIH’s ODM shares as payment for the debt. Following the latter’s move to block the rescue plan, IDC exercised that option meaning that FNMIH was no longer a shareholder in ODM.
Two other ODM shareholders, Red Gold Investments, an investment holding for trade union federation Cosatu, and First Aone Trade & Invest, a black economic empowerment holding company, are being sued by IDC over similar preference share agreements connected to funding their stakes in ODM.
ODM’s other shareholders include SES and the National Empowerment Fund.
