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Prime finds way out of Azul

JP Morgan buying 50% stake for $66 mil

SYDNEY — Australia’s Prime TV has finally plotted an exit from its ill-fated foray into Argentina’s loss-making Azul TV for A$108 million ($66 million) — despite the lack of a firm buyer.

After talking for a year with potential buyers, including Spain’s Telefonica, CEI Citicorp and Hicks, Muse, Prime has extracted a guaranteed sale price of $66 million from investment bank JP Morgan for its 50% Azul stake.

If JP Morgan hasn’t sold Azul by February, it will pay Prime interest, while Prime can elect to make Morgan pay for the shares if Azul is not sold by August 2001. The investment bank will, however, pocket any profit if the stake is sold for more than $66 million.

Hoping to repeat the cost-cutting magic that worked so well with its rural Oz stations, Prime bought into what was then Canal Neuve in late 1997 for $63 million, and later relaunched the web as Azul.

But thanks to an Argentine recession, Azul has incurred losses of $25 million since then, and while the web’s ratings and revenues are improving, Prime’s balance sheet has suffered: The Oz company just reported a $5 million downward spiral to a $1.5 million loss for the half-year ended Dec. 31.

(Peter Hudson in Buenos Aires contributed to this report.)

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