Telefonica is still mulling whether or not to take advantage of a call option that would allow it to take over Spanish DTH provider Canal+.
Reacting to reports claiming Telefonica was closing in on acquiring media conglomerate Prisa’s controlling…
Telefonica is still mulling whether or not to take advantage of a call option that would allow it to take over Spanish DTH provider Canal+.
Reacting to reports claiming Telefonica was closing in on acquiring media conglomerate Prisa’s controlling stake in the pay-TV company for €800m, the incumbent said it had not taken a decision yet.
On 25 February struggling Prisa had announced that its main shareholders had reduced their stake in the conglomerate below 30%.
This triggered a purchase option that allows Telefonica or Mediaset, which own 22% of Canal+ each, to acquire Prisa’s 56% stake in the broadcaster for an undisclosed amount. The call option expires on 12 March.
A person briefed on the situation suggested that while Telefonica is interested in taking over Canal+, it might pass on the call option and negotiate a deal outside of the agreement.
The person referred to uncertain conditions attached to the call option that Telefonica is not happy with, without going into specifics.
Prisa had reportedly been looking for €1bn for its stake, but no one met that price by a 31 January deadline for binding offers which the company had set. Al Jazeera, Canal+ France, Liberty Global and News Corp were reported to be eyeing the asset.
Today Bloomberg reported the €800m figure, citing it to people familiar with the matter.
Telefonica acquired its 22% stake from Prisa for €470m in late 2009. The company has made no secret of its desire to purchase the remainder of Canal+. Last week Telefonica COO Jose Maria Alvarez-Pallete confirmed that the incumbent telco was interested in buying Prisa’s 56% stake.
In June 2012 Telefonica bought convertible bonds in Prisa. The bonds convert to common shares automatically on their maturity this year and would give Telefonica an additional stake of 5-6%.
Prisa is selling assets to pay down some of its substantial debt burden. The media group has €3.241bn in net debt and, in December last year, agreed to a major debt restructuring with both its main financing banks – which represent 73% of the group’s debt – and institutional investors that acquired its debt in the secondary market, which together hold 11%.
Under the refinancing, the maturity on Prisa’s debt was extended by five to six years and an additional two-year credit line of €350m was secured. In return, lenders are set to receive a structuring and underwriting fee that will be paid in warrants for the company’s class A shares.
