Sky Deutschland plans to raise ?162.6m through a convertible bond from major shareholder News Corp by January 31, 2011, after a disappointing demand for its rights issue.
On September 28, Sky announced it had sold 60.9% of the 270 million shares it…
Sky Deutschland plans to raise ?162.6m through a convertible bond from major shareholder News Corp by January 31, 2011, after a disappointing demand for its rights issue.
On September 28, Sky announced it had sold 60.9% of the 270 million shares it offered as part of a capital increase intended to raise ?283m. The shares were offered for ?1.05 each, representing a slight premium to the ?0.977 they were trading it at close of the day prior 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 ?340m 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 ?525m 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 ?177.4m proceeds will repay the credit facilities,” a spokesperson for Sky Deutschland told SatelliteFinance.
It is now planning to raise the remaining ?162.6m through a convertible bond 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 ?1. The bond would also be subject to a 40-day holding period.
In its preliminary Q2 2010 results, Sky Deutschland reported net subscriber growth of 6,000 compared with 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 ?236.1m, up slightly from ?230.6m in Q2 2009. It also posted a negative EBITDA of ?47.4m, showing a year-on-year improvement of ?16m, and a quarterly net loss of ?81.9m, compared with a ?365.8m loss for the same period in 2009.
