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 the Spanish telecoms incumbent was closing in on acquiring media conglomerate…
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 the Spanish telecoms incumbent was closing in on acquiring media conglomerate Prisa’s controlling stake in the pay-TV company for €800m, Telefonica said it had not taken a decision yet.
On 25 February struggling Prisa announced that its main shareholders had reduced their stake in the conglomerate to below 30%. This triggered a purchase option that allows Telefonica or Mediaset, which each own 22% of Canal+, to acquire Prisa’s 56% stake in the satellite 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 been looking at upwards of €1bn for its stake but no one had met that asking price as of the 31 January deadline for binding offers. Al Jazeera, Canal+ France, Liberty Global and News Corp were all reported to be eyeing the asset.
Telefonica acquired its 22% stake from Prisa for €470m in late 2009. And 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 majority holding.
In June 2012, Telefonica also bought convertible bonds in Prisa. The bonds convert to common shares automatically on their maturity this year and would give Telefonica an additional 5-6% in the company.
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 the institutional investors that acquired its debt in the secondary market (who 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.
