Saban in cash wrangle

Disagreement fuels rumor that takeover in danger

BERLIN — Haim Saban’s takeover of Kirch Media’s TV assets has run into more snags as Saturday’s 525 million euros ($623 million) payment date looms.

The two sides are still wrangling over finance, and the billionaire producer’s reps are to meet creditor banks today to present a detailed plan.

The latest difficulties are said to stem partly from the creditor banks’ decision to reduce a capital credit line of more than $500 million that was meant to secure ProSiebenSat 1 through 2004. But with the advertising market still in the dumps and ProSiebenSat 1’s financial status in question, the banks are anxious to lower their risk. Saban believes the credit line is vital to ProSiebenSat 1’s future, especially in view of sinking ad revenues.

The inability to reach a mutual agreement has fueled speculation that the takeover could be in danger and prompted Kirch Media execs to draw up an emergency plan in case the deal falls through.

Saban sources deny that the deal is in trouble, saying they expect the acquisition to close mid-June. “We are making good progress and working hard to close this deal at the earliest possible time,” said Saban spokeswoman Elisabeth Ramelsberger.

Saban is still on the lookout for investment partners to join him in the acquisition.

He had previously faced hurdles from the creditors following his winning bid for the Kirch assets in March.

They had initially demanded quick repayment of loans attached to Kirch’s other main asset, the vast programming library. The U.S. producer had argued that the money would be better spent investing in the business rather than in repaying bank loans. Nevertheless, Saban managed to placate the banks with a revamped business plan.

Saban’s successful takeover of the multichannel ProSiebenSat 1 and the licensing business may hinge not only on whether he finds investment partners but also on whether he can again appease the creditors.

Should the deal collapse, an alternative plan drawn up by Kirch Media and its banks would call for interim chief exec Hans Joachim Ziems to remain in charge of the company, ProSiebenSat 1 and the licensing division with the hope that market conditions and the value of the assets will improve.

Kirch Media declined to comment on the alleged plan, which has been widely reported in the local press.

Meanwhile, U.S. shareholders in ProSiebenSat 1 have taken legal steps to get a say in the decision as to whether Saban must buy the group’s outstanding shares.

Under German law, investors are obliged to make an offer for outstanding shares when they acquire more than 30% of voting rights.

Saban is set to acquire 36% of the company and 72% of voting rights. He has asked Germany’s Federal Financial Supervisory Authority to exempt him from the buy-up, which could cost another $500 million on top of the $620 million he is to pay for Kirch Media’s stake.

(Christian Kohl in Cologne contributed to this report.)

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