Takeover at the zero hour
TOKYO — Shareholders in Japan’s cash-strapped distributor Gaga Communications today are expected to approve a takeover by Broadband Internet service provider Usen Broad Networks (UBN), a part of the Usen Corp.
The takeover comes as Gaga is poised to default on loans of some $100 million.
UBN will pay ¥11 billion ($105 million) for 54.42% of the distrib, with $28.8 million more coming from entertainment company Avex Holdings’ honorary chairman, Tatsumi Yoda, for a 16.33% share. UBN bought 20% of Avex in September.
Some $134 million will be pumped into Gaga in late December and mid-January.
Other shareholders include video software distrib Rentrak Japan, 5.44%; former majority shareholder and chairman Masaya Nakamura, with a mere 4.67%; and music technology company Onkyo, with 4.53% — down from the 19.1% it had acquired in February during another financial injection.
Longtime shareholder Namco, a gaming company, is left with 0.85%.
UBN prexy Yasuhide Uno will become president of Gaga, while Yoda will replace Nakamura as chairman.
Gaga’s co-founder and CEO Tetsu Fujimura will remain a director. He’s the only one of the seasoned top Gaga execs to remain on the board. Familiar faces such as chief operations officer Nick Marumo, Yukihiro Sakai and many others lose their posts.
As dramatic as the makeover of Gaga is, many in the local industry have doubts about whether UBN will be able to turn the company around, given their scant distrib experience.
The planned distribution of content on all sorts of platforms that UBN controls might not safeguard enough returns.
UBN and the Usen Group have liabilities equaling $1.29 billion.
The new Gaga is optimistic. It predicts a net profit of $1.9 million this fiscal year, which ends Sept. 30, 2005, compared with a net loss of $171 million at the end of last September.