Australis Doom Or Deal Rumors Flying
The Age
Sunday April 14, 1996
Australis Media enters its third week of suspension today amid widely differing claims about the progress of vital refinancing talks with Mr Rupert Murdoch's News Corp and the US cable giant Tele-Communications.
Suggestions that the $US150 million ($A190 million) lifeline was finalised and would be announced in the next few days were countered by claims that negotiations had broken down altogether because the microwave and satellite broadcaster's business plan did not add up.
One source close to the parties said an investment bank review of Australis's business plan had found the broadcaster would need much more than the $190 million pumped into it before it broke even.
This had prompted News and TCI to pull out of negotiations and focus on buying assets from Australis as the only ``safe" way to pump cash into the company, which is being financed to the tune of $US5 million a week by its largest shareholder, the TCI offshoot Lenfest Communications.
Foxtel, News's pay TV partnership with Telstra, has offered Australis about $230 million to buy out the distribution rights to Australis's programming. This would relieve Foxtel of a $US18.18 per subscriber per month payment to Australis for programming.
But this was dismissed as News Corp propaganda by other sources.
One analyst maintained the refinancing was being concluded on terms more favorable to Australis and would be announced in the next couple of days.
The refinancing was originally reported to involve TCI/Lenfest and News providing a $US150 million bank guarantee or loan, convertible into Australis shares at about 55 cents a share after six months if not repaid or discharged by new long-term financing.
TCI/Lenfest and News would also get options or warrants over up to 10 per cent of Australis's capital exercisable at 20-30 cents a share as the up-front price of the rescue package.
TCI/Lenfest and News would end up with 64-65 per cent of the capital between them if Australis failed to repay or discharge the loan.
© 1996 The Age
Share This