On Digital Media commenced business rescue proceedings as far back as 31 October 2012, having slipped into financial distress for an extended period of time.
In March, a source close to TopTV told BusinessTech that TopTV was close to running out of funds, while a spokesperson for ODM said that some staff had left the group due to financial constraints.
In a business rescue status report released on 5 September 2013, legal firm, Bowman Gilfillan noted that Peter van den Steen, the business rescue practitioner of ODM, continues to work with all parties to ensure fulfillment of suspensive conditions.
ODM announced at the end of April that it would proceed with a rescue plan which would see StarTimes acquiring a 20% stake in the group.
StarTimes would 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%.
“Importantly, the shareholder’s agreement amongst the new shareholders of ODM has been signed. It was signed on 1 August 2013 by the majority of the parties, with a few final signatories signing that agreement shortly thereafter” a document on ODM’s website read.
“In addition, the shareholder’s agreement amongst the shareholders of the ‘Company B’, being the new company that will provide transmission services to ODM, was signed,” the document said.
A person working for ODM on the rescue deal said that shareholders were working on the fulfillment of the regulatory suspensive conditions contained in the business rescue plan.
He said that TopTV, meanwhile, continues to operate as a going concern.
“Assuming that there are no undue delays in the regulatory process, there is a strong enough possibility that the implementation date will be reached by November or before,” the document said.
Under terms of the original agreement in April, StarTimes would 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 was believed to owe the DBSA in excess of R200 million. It said the secured portion of the DBSA’s claim would be discharged in full for R50.82 million.
The Chinese firm would 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, as well 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.
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.
TopTV CEO Eddie Mbalo was not available for further comment.