TopTV shareholders move to stop rescue plan
Two minority shareholders of On Digital Media (ODM), parent company of pay-television operator TopTV, have launched an application in the South Gauteng High Court with the aim of preventing business rescue plan deal with Chinese firm StarTimes, from going through.
ODM voluntarily commenced a business rescue plan on 29 October 2012, after the group announced it was financially distressed.
At the end of April, ODM said that it would proceed with a rescue plan which would see StarTimes acquiring a 20% stake in TopTV, and provide “sufficient additional capital” to pay off the company’s creditors to ensure solvency.
In a letter posted on the TopTv website on Monday (21 October), Peter van den Steen, the business rescue practitioner of On Digital Media noted that First National Media Investment Holdings (20.4%) and Atchuthanandan Moodley (0.7%) with a combined holding of 21.1%, were seeking interdictory relief against him and ODM, preventing the practitioner from taking any steps to implement the business rescue plan.
“Irreparably damaged”
According to legal documents, the applicants seek to “have the business rescue practitioner lawfully implement the BR Plan, and desist from unlawfully doing so”.
The applicants are concerned that, in the event that the BR Plan fails, ODM will be “irreparably damaged”.
They believe that ODM is currently in a vulnerable position, and want to ensure that the BR Plan is effectively and expeditiously implemented in order to protect the interests of ODM and their own interests.
The applicants argued that the practitioner has already implemented significant aspects of the BRP in what appears to be permanent respects (including the divestiture of key assets of ODM) that cannot apparently be undone.
The applicants voiced concern that if the BRP does not go through, the consequences divesting ODM of its key assets and underlying value may be permanent without any option of ODM retrieving such assets.
StarTimes issues
The applicants noted that StarTimes was under financial stress of its own, which would then be tied to that of ODM.
They raised concern over how control had been given to StarTimes to change billing methods and programming – at the expense of ODM’s own content which it controlled – as well as the termination of German uplink contracts in favour of Beijing’s StarTimes.
“In this respect, all content being broadcast into South Africa is now under foreign control,” they said.
Moreover, the applicants argued that the BRP was implementing the rescue plan in full force without the proper permissions, which requires unconditional approval.
To illustrate the point, the applicants raised concern over the transfer of the ECNS license from ODM to StarTimes – a matter which is still pending with regulaor, Icasa.
“The business rescue practitioner is an accountant by profession. He is not familiar with the business and operations of ODM,” the applicants said, noting further that van den Steen had not once consulted with the board of directors of ODM.
ODM responds
“The company (ODM) and I will be giving notice of intention to oppose the application shortly,” Peter van den Steen said.
ODM had hoped to conclude the rescue proceedings by November – a point used by the applicants to press the urgency of the application.
The applicants intend to bring the application to court by the 29th of October, while all stakeholders, including ODM and its shareholders, have until Wednesday to respond.
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