News Corp is to guarantee two rights issues as part of a €525 million debt restructure of the German pay-TV platform Premiere.
Existing debt agreements will be replaced by two long-term facilities of €525 million, conditional on News Corp’s guarantee of €450m, spread between the two rights issues. The combination of net losses and a negative cash flow had required Premiere to seek a waiver from its lenders.
News Corp will also have to seek a waiver from market regulator BaFin in the event that its shareholding in the company goes above 30%. It will also need approval from Premiere’s other shareholders to increase the capital of the Munich-based company.
While Premiere is expecting a negative cash flow through 2009 it is looking to break even during 2010. CEO Mark Williams said this could be achieved with a subscriber base of between 3 million and 3.4 million.
Subscription levels were currently stable with new interest compensating for a higher than recent churn. At the end of Q3 2008, Premiere had 2.411m subscribers.
The extra cash will be used to develop its programming offer.
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