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I-Cable announces open offer, could come under new control
Posted on Friday, 21 April 2017 10:58
I-Cable Communications, the struggling Hong Kong-based pay television provider, has announced plans to raise HKD 704.00 million (USD 90.54 million) in an open offer after parent company Wharf Holdings said it would cease funding the loss-making group.
Under the terms of the fundraising effort, the company is issuing 3.35 billion shares at HKD 0.21 apiece, a 65.6 per cent discount to its last close of HKD 0.61 on 19th April.
However, after suspending trading for three days pending the announcement, stocks fell 21.0 per cent to HKD 0.46 when the market opened today.
The cash call, which requires existing backers to pay for the offer of shares, comes after Wharf Holdings decided to exit non-core entities in media and telecommunications in favour of its real estate operations.
However, despite its effort the company failed to sell the pay-TV firm and instead decided to stop providing funds.
Such a deal could result in a change of ownership at I-Cable to a company controlled by Hong Kong mogul Henry Cheng, and comprising a consortium of investors known as Forever Top, which includes Chow Tai Fook Enterprise, which have agreed to fully underwrite the open sale.
The group could end up with a stake of around 62.5 per cent in the broadcaster.
In addition, a further USD 300.00 million is expected to be raised by I-Cable through a conversion of debt due to Wharf into an equity stake in the company.
According to a report by the South China Morning Post, the deal came just in time to save the firm and its 2,176 employees.
I-Cable had 909,000 customers for its television services, 156,000 broadband subscribers and 95,000 telephony clients last year.
In the financial year ended 31st December 2016, the company generated revenue of HKD 1.41 billion, a 6.6 per cent decrease from HKD 1.51 billion in the previous 12 months.
Pre-tax loss widened 28.9 per cent to HKD 317.87 million in FY 2016 (FY 2015: HKD 246.64 million).
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