Austar Interest Bill Up Five-fold In First Quarter
Sydney Morning Herald
Thursday May 2, 2002
Austar revealed yesterday that its interest costs had blown out five-fold in the first quarter after defaulting on its $400 million loan.
The regional pay-TV operator paid $16 million in interest in the three months to March 31, more than five times the $3 million interest paid in the last quarter of last year.
Austar attributed the massive increase to the higher interest rates it was charged after it defaulted on its loan repayments at the beginning of the year.
Austar recorded negative operating cash flow of $21 million for the quarter, as higher interest and supplier payments outweighed the $91 million it received from customers.
Austar's cash reserves had almost halved to just $59.6 million by the end of March. Austar began the year with $103 million cash in the bank.
The company also has access to $30 million in the form of a ``contingent cash account" which was provided by its 81 per cent shareholder United Global Com.
Austar's 15-member banking syndicate agreed to refinance its loan only after United Global Com had put up this guarantee.
Austar said that its current cash position was ``in line" with the business plan with its banks to which it agreed when it refinanced its debt.
``Austar remains confident that it will achieve its financial targets for 2002," said the company in a statement to the Australian Stock Exchange.
Austar renegotiated the terms of the $400 million loan almost two months after it fell due on January 1.
Austar now has until 2006 to repay the debt.
As part of its refinancing, Austar was forced to pay its lenders $10.7 million last quarter. Austar also revealed that last December's radical overhaul of its business which included sacking a third of its staff, closing regional offices and outsourcing many business functions cost the company an extra $4.8 million in payments to suppliers.
Austar said, however, that the business restructuring enabled it to cut its capital expenditure by $6 million last quarter.
Austar shares fell 1c to 16.5c yesterday.
Elsewhere in the pay-TV sector, Foxtel chief Kim Williams met John Fairfax corporate counsel Gail Hambly to discuss Fairfax's request to gain access to the Foxtel network and content. While both parties maintain that the discussions were confidential, it is believed that Foxtel and Fairfax are a long way off reaching any kind of agreement.
``It is unclear whether we will meet again in the near future," said a Fairfax spokesman.
© 2002 Sydney Morning Herald
Share This