Despite StarTimes identifying a number of “operational deficiencies” at TopTV, it believes it can take on current recumbent, DStv.
ODM began business rescue proceedings in November 2012, in order to stay afloat financially while it searched for an equity partner.
StarTimes aims to acquire a 20% stake in TopTV, and provide “sufficient additional capital” to pay off the company’s creditors to ensure solvency.
Local regulations currently cap foreign ownership on licensed broadcasting entities at 20%.
StarTimes will pay R30 million to TopTV’s main backer, the Development Bank of Southern Africa (DBSA) and offer it an equity opportunity of 1.99% of the issued share capital in NEWCO.
ODM is believed to owe the DBSA in excess of R200 million. It says the secured portion of the DBSA’s claim will be discharged in full for R50.82 million.
The Chinese firm will also pay R37.5 million to all creditors, outside of the DBSA, escalating by an amount of R2.50 per month from 1 June until the implementation date.
The group would also look to settle with preference shareholders of ODM, who have claims against the company, aswell as all other shareholders.
TopTV’s main shareholders include the Industrial Development Corporation (IDC); First National Media; Kopano Ke Matla (Cosatu’s investment arm); National Empowerment Fund; and satellite business SES.
Preference shareholders claims would be discharged at an equivalent of R3.45 to the rand, subject to a maximum amount of R9.33 million.
Shareholder claims will be discharged t an amount of R2.25 to the rand, subject to an amount of R21.59 million.
Startimes says it started developing its African markets in 2002, and was issued the first digital TV operator license by Rwanda in 2007.
Currently the group has licenses and registered companies in 10 African nations including: Nigeria, Tanzania, Uganda, Rwanda, Burundi, and Republic of central Africa, Guinea and Kenya.
The Asian company adds that it has established wireless digital TV platform in many African countries and will invest in mobile TV service platform and Internet business platform in the near future.
According to StarTimes, one of the major weaknesses of TopTV has been the high costs paid for programme content.
“StarTimes has commenced discussions directed at negotiating and agreeing new contractual terms for the supply of programming and related services,” ODM said.
ODM says that a deal with StarTimes would give creditors a better return than what would result from liquidation.
It adds that the deal would maximise the likelihood of TopTV’s existence on a solvent basis, and preserve jobs and create a sustainable platform for further job creation.
However, it notes that a restructuring of the company’s workforce “is often necessary” to render the business sustainable.
“The preliminary view of StarTimes is that job losses may occur from the implementation of this BR (business rescue) plan,” ODM said, adding that retrenchments would be in accordance with the relevant laws.
According to ODM StarTimes has come to its rescue and will provide temporary supervision of TopTV, and the management of its affairs, business and property, and by way the ‘business rescue plan’ will have control to restructure TopTV’s affairs, business, property, debt and other liabilities in order to continue on a solvent basis.