Pay-TV operator Sky Deutschland has announced that News Corp will raise its stake in the company to as much as 45.4% through a new capital increase that will take place in January.
Sky Deutschland will place up to 49 million new shares, to which News…
Pay-TV operator Sky Deutschland has announced that News Corp will raise its stake in the company to as much as 45.4% through a new capital increase that will take place in January.
Sky Deutschland will place up to 49 million new shares, to which News Corp will indirectly subscribe through its fully-owned subsidiary News Adelaide Holdings BV.
The shares have been priced at E2.25, a higher value than company stock was trading at in the five days prior to the announcement of the placement, when the highest value was E2.01.
It is anticipated that the placement will generate E110-E120m in new funding for Sky Deutschland, which will reinvest the proceeds in its sales and marketing initiatives and further accelerate the rollout of new channels and HD services in 2010.
News Corp’s overall holding in Sky Deutschland will now rise from 39.96% up to a maximum of 45.4%, depending on the final size of the placement.
The global media giant was granted approval by the German financial regulator BaFin to exceed the usual limit of 30% ownership without triggering a mandatory takeover offer at the end of 2008, due to the danger Sky Deutschland (then known as Premiere) faced to its chances of continuing as a viable business without News Corp investment.
The total number of Sky Deutschland’s registered shares will increase from 490,147,144 shares up to a maximum of 539,161,858 shares.
The company has requested that the bank syndicate that holds its E525m long-term credit facility for a waiver on a mandatory prepayment from the equity proceeds of this latest placement. It has also asked that the syndicate adjust its existing covenants to reflect the new investment.
In its announcement, Sky Deutschland said that the two largest lenders in the group, which is led by ABN AMRO, have agreed to this waiver, and that it anticipates the approval of the other members during January 2010, at which point the placement will be concluded.
The new injection of cash reflects the continuing financial difficulties Sky Deutschland is suffering, as it struggles to match the pace of subscriber growth seen in other European pay-TV markets.
The company has altered its medium-term outlook and now exports to report a net loss in 2011, the year that it had previously targeted to enter into profitability. It still maintains that 2011 will be positive in terms of EBITDA.
Its projected EBITDA losses for 2009 are E255-E265m, with EBITDA losses of E130-E170m anticipated in 2010.
At the beginning of December 2009, the company stated that CEO Mark Williams will step down on March 31, 2010 for personal reasons. He will be replaced by Brian Sullivan, managing director of the Customer Group at Sky Deutschland’s British counterpart, BSkyB. Sullivan will be the company’s fourth chief executive since its flotation as Premiere in March 2005.
