Hong Kong’s second-biggest pay-TV operator, i-Cable Communications, is set to announce a takeover deal, according to a stock exchange filing on Monday.
i-Cable’s shares were suspended from trading in the morning before the market opened, pending an announcement “potentially involving the Hong Kong Code on Takeovers and Mergers”.
“i-Cable Communications is likely to announce new shareholders or consolidation with other companies to add new money to finance its future expansion,” said Louis Tse Ming-kwong, managing director of Wealthy Securities. “The pay-TV and other media businesses are struggling as there are a lot of competitors sharing a small pie in Hong Kong.”
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i-Cable is required to spend HK$3.45 billion (US$443 million) between 2017 and 2023 in capital investment and programming content under a concession that runs until May 2029, according to an earlier stock exchange filing.
Founded in 1999, i-Cable provides broadband internet and pay-TV services. It competes with rivals such as Now TV, Viu TV and Hong Kong Broadband Network in a city of 7.5 million people. i-Cable had 754,000 pay-TV subscribers as of June 2020, giving it a 38 per cent share of the market, according to its 2020 interim report and data from the Office of the Communications Authority.
In January, i-Cable sold HK$200 million worth of convertible bonds to Forever Top, its controlling shareholder with a 43.2 per cent stake. That was the fourth time the firm had tapped its owners to survive over the past two years, having used up all its resources.
Forever Top is owned by a consortium led by its chairman David Chiu Tat-cheong, New World Development billionaire Henry Cheng Kar-shun, Chow Tai Fook Enterprises and John Huan Zhao of private equity firm Hony Capital.
The consortium came in as a white knight and took control of i-Cable in 2017 after its former majority shareholder Wharf (Holdings) refused to inject any more fresh capital into the company. Wharf decided to exit from the pay-TV operator after it had made losses over 10 consecutive years totalling about HK$2 billion.
Chiu is chairman of property developer and hotelier Far East Consortium International and the second son of the late Deacon Chiu Te-ken. Both Deacon Chiu and New World Development’s Cheng were investors in free television broadcaster ATV during its heyday in the 1980s and 90s. ATV was forced to go off-air in April 2016 after 59 years, as funding dried up after numerous years of losses.
In December, i-Cable laid-off or reassigned some 100 staff in a bid to survive the economic downturn sparked by the Covid-19 pandemic.
The company’s shares price last closed in Hong Kong on Thursday at 6.8 HK cents, down 27 per cent over the last three months but up by 8 per cent this year.
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