Rescue Plan for Hong Kong Cable TV
I-Cable Communications Limited, the owner of Hong Kong Cable Television Limited, has announced it is seeking to raise approximately HK$704 million (USD$90.5 million) to keep its operations afloat following an announcement by The Wharf (Holdings) Limited, the controlling shareholder of i-Cable, that it would not be providing additional funding to the company.
I-Cable is looking to issue 3,352,520,666 Offer Shares to the Qualifying Shareholders at the Offer Price of HK$0.21 per Offer Share, on the basis of five (5) Offer Shares for every three (3) existing Shares held by each Qualifying Shareholder.
The offer is underwritten by a consortium lead by Far East Consortium chairman David Chiu, Chow Tai Fook Enterprises and its chairman Henry Cheng, and Li Sze Lim, chairman of Expand Ocean L.P. and Guangzhou R&F Properties.
To date, Wharf Finance, a wholly owned subsidiary of Wharf, has provided the Wharf Facility, being a revolving loan facility of up to the principal amount of HK$400 million to HKCTV. The Wharf Facility, according to its existing terms, will expire on 31 December 2017.
I-Cable, HKCTV and Wharf Finance entered into a Loan Capitalisation Agreement on 14 April 2017 pursuant to which Wharf Finance has agreed to effect the Loan Capitalisation, whereby the Loan Capitalisation Amount in the principal sum of HK$300 million under the Wharf Facility will be capitalised into 841,987,090 Loan Capitalisation Shares, at the issue price of one Share for approximately HK$0.3563, to be issued to Wharf Finance or its nominee.
The Loan Capitalisation can be effected in tranches, in order for the Company to fulfil the Public Float Requirement at all times during the Relevant Period.
The Company, HKCTV and Wharf Finance also entered into a Facility Term Extension Agreement on 14 April 2017 pursuant to which Wharf Finance has agreed to revise the terms of the Wharf Facility as follows:
(I) with effect from the completion of the Open Offer:
(i) the term of the Wharf Facility shall be revised from “1-year from 1 January 2017 to 31 December 2017” to “3-years from 1 January 2017 to 31 December 2019”; and
(ii) the Final Maturity as defined in the Wharf Facility Agreement shall be revised from “31 December 2017” to “31 December 2019”.
(II) with effect from the completion date of the Loan Capitalisation Agreement, the principal loan amount under the Wharf Facility shall be revised from a “Revolving Loan of HKD400,000,000” to “Revolving Loan of HKD100,000,000”.
The Facility Term Extension Agreement is conditional upon approval .
As a term of the Undertaking, Wharf has also procured the relevant member(s)/associated companies of the Wharf Group to enter into the new formal lease agreements in respect of the Relevant Key Properties according to which the Group has been granted with options to renew the leases/licences to use the Relevant Key Properties according to the terms of the Property Agreements.
On 3 March 2017, Hong Kong’s Secretary for Commerce & Economic Development (SCED) requested HKC to return signed copies of the renewed Pay TV Licence by 15 March 2017. In light of the Wharf announcement, HKC requested SCED for an extension of the deadline. This has been granted until 26 April 2017.
The existing Pay TV Licence will expire on 31 May 2017. On 13 December 2016, the Chief Executive-in-Council approved HKCTV’s application for renewal of its Pay TV Licence for a period of 12 years from 1 June 2017, but such offer of renewal has not yet been accepted by the Company.
In light of the new announcements, HKCTV has made a further request to the SCED to extend the deadline for accepting the offer of renewal of the Pay TV Licence to 31 May 2017. The SCED is still considering the request for extension.
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