Last week’s announcement that a joint venture between Connecticut-based Century Communications and Continental Venture Capital had acquired the majority interest in the second Aussie pay TV license has been denied by the provisional license holder, UCOM’s Albert Hadid.
Continental Venture Capital chairman Vanda Gould said his company and Century had formed Continental Century Ltd. and acquired a 91.5% stake in UCOM, with Hadid retaining 8.5% but resigning as a director.
Gould disputed the validity of Hadid’s action. “We have a legally enforceable letter of intent signed by Mr. Hadid last December,” Gould said. “For some reason, he is now seeking to renegotiate his position.” He refused to speculate on Hadid’s reasons, but it is understood that under the alleged agreement, his remaining 8.5% holding could be watered down at a later date.
Another possible factor is over who will commission local programming. Hadid has said he would retain control over that area for the eventual operator. This is an important fiscal area of Aussie pay TV operations, because the operators are required to spend 20% of their program acquisition budget on domestic product.
“We formed a shelf company in December for the express purpose of joining with Century,” Gould said. “It was at that time that Century put up the $ A3.5 million ($ 2.4 million) deposit (for the A license as required by the government).” The shelf company became Continental Century.
Gould said the “proposed capital structure will be financed by a mixture of debt and equity, with (about) $ 20.7 million invoting and non-voting shares being issued.” Century is providing a working capital line of credit to establish operations and a further $ 34.5 million in debt. CVC’s stake in Continental Century will be $ 3.45 million.
Century Communications is the 15th largest cable operator in the U.S., with assets of $ 1.275 billion. Continental Venture’s assets stand at $ 54.5 million, of which $ 17.9 million represents working capital.
Foreign interests are limited to 35% of the license, with a 20% single owner ceiling. Thus, Continental Venture would retain a minimum of 70% voting control, said Gould, which indicates that Century — though limited to 20% control — might have as much as 95% economic interest.
The Trade Practices Commission and the Australian Broadcasting Authority are examining the revised corporate structure of the A license bidder, but no recommendations or decision are apparently imminent.