Billionaire Henry Cheng Kar-shun is sinking HK$316.4 million (US$40.6 million) to take full control of pay-TV operator i-Cable Communications to turn around 13 years of losses amid heightened interest in media assets in Hong Kong. The stock surged on the news.
The tycoon, whose family controls New World Development, disclosed an agreement signed in September to pay HK$208.9 million to buy out long-time partners David Chiu Tat-cheong and Li Sze Lim in Forever Top (Asia), the firm that owns 43.2 per cent of the city’s second-largest pay-TV operator.
He will then proceed to make an offer to buy the 56.8 per cent of i-Cable shares from other holders at HK$0.0264 each and cancel as many as 19.9 million stock options, valuing the bid at up to HK$107.5 million, according to an exchange filing late on Tuesday.
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The takeover offer represents a 61 per cent discount to the stock’s last traded price of HK$0.068 on September 30. The stock jumped 40 per cent at one point when it resumed trading on Wednesday following a five-week suspension before closing 18 per cent higher at HK$0.08.
The transactions represent another interesting move in the Hong Kong media industry. Kwok Hiu-ting, the daughter of Kaisa Group chairman Kwok Ying-shing, bought a controlling stake in publisher Sing Tao News Corp in February for about HK$370 million. Alibaba Group Holding has denied recent rumours about a potential bid for its unit that owns this newspaper.
Cheng and his family members are ranked the third richest in Hong Kong by Forbes with a fortune of US$22.1 billion. Their family assets include stakes in New World, Chow Tai Fook and a handful of property investments in mainland China.
Cheng is paying HK$148 million to buy a 24.5 per cent stake in Forever Top from Chiu, who is the chairman of developer Far East Consortium. He will also pay HK$60.9 million to buy a 16 per cent stake in Forever Top from Li, who is the co-founder of mainland developer Guangzhou R&F Properties.
The purchases will boost Cheng’s interest in Forever Top to 86 per cent. John Huan Zhao of private-equity firm Hony Capital will retain his 14 per cent stake in Forever Top. The consortium took over i-Cable from Wharf (Holdings) in 2017.
Cheng intends to keep i-Cable’s listing status, and has no intention to make major changes to the existing operations and business of the group after the takeover, according to the exchange filing. He may take steps to optimise the value of the group, it added.
Founded in 1999, i-Cable provides broadband internet and pay-TV services. It had 754,000 pay-TV subscribers as of June last year, taking a 38 per cent share of the market, making it the second largest player after Now TV.
I-Cable has lost money every year since 2008, and incurred a HK$175.2 million loss in the first six months this year.
It is required to spend HK$3.45 billion between 2017 and 2023 in capital investment and programming content under a concession that runs until May 2029. It laid off or reassigned some 100 staff last December amid a recession sparked by the Covid-19 pandemic.
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