As further followup to my previous 2 posts about the "HK television wars" and the state of the television industry, I wanted to share the latest "hot off the press" news about something I had mentioned in those posts: the fate of i-Cable.
As previously stated, i-Cable's parent company Wharf Holdings had announced that they were no longer going to invest any more funds in the company, which meant the fate of the station's cable network as well as newly acquired free-to-air TV network hung in the balance. There had been rumors that Forever Top's David Chiu -- who had already submitted an application for a free-to-air license and was still awaiting the government's decision -- was interested in buying the station. This rumor went on for weeks and now finally, it has been confirmed. David Chiu has agreed to invest funds in i-Cable, which means he will own about half the company and therefore become a decision-maker in the station. The article below has more details, so I would say go ahead and read it, but one thing I found interesting that I wanted to point out was the fact that David Chiu stated he already told the government to put his free-to-air license application on hold until they sort everything out with i-Cable. This actually makes perfect sense, since i-Cable already has a free-to-air license so if he takes over the station, he essentially won't need another one, though not sure at this point what he plans to do with Forever Top -- it sounds to me that both will function as separate entities, but right now, it's kind of too early to tell. I guess we still have a few weeks to find out, as I'm assuming that there will be a little more clarity by the time i-Cable's free-to-air channel Fantastic TV launches on May 14th.
News article: i-Cable down 21 pc despite white knights ride to rescue with plans for expansion
Troubled pay-television provider i-Cable Communications dropped 21 per cent on Friday morning as it resumed trading after announcing that it had found a white knight.
Shares of i-Cable dived to 46 Hong Kong cents shortly after market open, down 21 per cent from its previous close of 61 Hong Kong cents. The company had suspended trading for three days pending the release of an announcement that involves “inside information”. By 10am, shares had erased some losses and fallen 13 per cent to 53 Hong Kong cents.
The decline came after i-Cable announced Thursday night that it had been rescued by a consortium of white knights led by property tycoon David Chiu Tat-cheong together with New World Development chairman Henry Cheng Kar-shun and others, who plan to use the broadcaster as a foundation on which to build a new media company.
“The share price dropped as the market is not sure if the HK$1 billion injection is sufficient to help with a turnaround for i-Cable, which has suffered losses for many years. In addition, the rescue plan involves right issues which require existing shareholders to pay for the offer of shares. That is not welcomed by investors,” said Ben Kwong Man-bun, director of KGI Asia.
But Kwong said the future share price of the company should become more stable with the help of the white knight.
“It all depends on what the next business plan of the new buyers will be. If the white knight has a good development plan for i-Cable, it would be positive for the future of the company.”
In a statement late on Thursday, Forever Top said it had agreed on a deal with i-Cable’s parent, Wharf (Holdings), for an equity injection of HK$1 billion to strengthen the broadcaster’s financial position.
In addition to Chiu, other backers of the consortium include New World Development chairman Henry Cheng Kar-shun, Guangzhou R&F Properties chairman Li Sze-lim, John Zhao Huan, president of private equity firm Hony Capital, and conglomerate Chow Tai Fook Enterprises.
Chiu is the second son of Deacon Chiu Te-ken, who founded ATV, the free-to-air broadcaster that went off the air in May 2016.
Under the agreement, about HK$704 million will come from an open offer to existing shareholders, fully underwritten by Forever Top. A further HK$300 million will come from the conversion of debt due to Wharf into an equity stake in i-Cable.
An open offer allows existing qualifying shareholders to increase their stake in the company.
According to a filing to the Hong Kong stock exchange, five shares will be offered for every three existing shares held by qualifying shareholders at 21 HK cents each.
Following completion of the offer, Forever Top will hold 40 to 54 per cent of i-Cable’s issued share capital, depending on the take-up of the offer by the public shareholders.
“Upon completion of the transaction, Forever Top will use i-Cable as the platform to drive its media business,” Chiu said in the statement.
“Hong Kong has been known as Hollywood of the Orient and I believe television talent, whether back-stage or front-stage, are abundant here. I am hoping that all these talent will be given the chance to bring into play in the most flexible manner of co-operation with i-Cable.”
He also said Forever Top would strive to strengthen the scope of financial news in the region as well.
The announcement comes just in time to save i-Cable and its 2,176 employees from the axe.
Last year, i-Cable made a loss of HK$313 million and Wharf had indicated it would cease funding the broadcaster and exit the unprofitable business of providing pay television and broadband internet.
The Communications Authority had said i-Cable must fulfil its financial responsibilities before its pay-television licence matured on May 31.
“With the new equity injection, i-Cable’s capital structure and operation outlook will be significantly improved – increased equity, reduced debt and possibly expanded services,” Chiu said.
Forever Top, which had previously applied for a domestic free-television licence, said in the statement that it had requested the Communications Authority put on hold the processing of this application until the outcome of the equity injection into i-Cable became clearer.
The injection plan will require approvals from the independent shareholders of i-Cable, the Securities and Futures Commission, the Hong Kong stock exchange and the Communications Authority.
Forever Top said it hoped the deal would be completed in September.
Trading in i-Cable’s shares was suspended on Tuesday, pending the result of an announcement.
In a statement to the stock exchange, the firm said it had applied for trading to be resumed from 9.30am on Friday.