Struggling Hong Kong pay-TV platform, I-Cable is seeking $91 million (HK$704 million) of refinancing through a share issue expected to bring in new investors.
I-Cable is Hong Kong’s leading conventional cable TV provider, though it has been overtaken by PCCW’s Now TV, which is delivered as an IPTV service. Its news channel is regarded as its biggest strength. The refinancing move was made necessary after dominant owner Wharf Holdings last month said that it would stop funding the loss-making business.
Wharf, which currently owns 73% of the company, says it will not participate in the rights issue. But as part of the rescue mission, it will convert HK$300 million of convertible loans into shares, bringing the total financial relief to $129 million (HK$1 billion.)
The company’s shares resumed trading on Friday after two days of suspension. In initial trading they dipped as analysts feared that the new deal did not bring in enough new cash. But after the new investor group known as Forever Top outlined its plans – including cutting 200 staff, or some 10% of I-Cable’s current headcount – the stock rallied. The shares finished on Friday up 18% at HK$0.72 apiece.
The share issue, made HK$0.21 per share, a 66% discount to last week’s average stock price, is underwritten by Forever Top, which is headed by property magnate David Chiu Tat-cheong and head of the New World property, transport and leisure group Henry Cheng Kar-shun. Other investors include John Zhao and Hony Capital, investors in Hollywood studio STX Entertainment.
After the share issue and the loan conversion, Forever Top could own as much as 58% of I-Cable.
I-Cable still has yet to reapply for its broadcast license.