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Thursday March 18, 2010

Astro to go private

Deal to be valued at RM8.5bil cash or RM4.30 a share

linsay@thestar.com.my

BUKIT JALIL: The major shareholders of Astro All Asia Networks plc led by tycoon Ananda Krishnan, intend to take the country’s sole pay-TV operator private in a deal valued at RM8.5bil cash or at an offer price of RM4.30 a share.

The minorities’ shares are valued at up to RM2.4bil. The major shareholders are buying over the company that was listed in October 2003 as they feel that the privatisation would pave the way for Astro to optimise its capital structure for its expansion locally and regionally.

Astro will only be delisted if the major shareholders secure more than 90% of the shares of its company from the privatisation exercise, otherwise its listing status will be maintained.

Ananda owns 42% of the listed entity, while Khazanah Nasional Bhd has a 21% stake.

“We have a very fair price on the table. I think we can achieve the 90% acceptance target,” said CIMB group chief executive Datuk Seri Nazir Razak.

CIMB Investment Bank Bhd has been appointed adviser to Astro Holdings, the vehicle for the privatisation, while RHB Investment Bank Bhd and UBS Securities Malaysia Sdn Bhd have been appointed advisers to Astro.

Should the acceptances cross the 90% threshold, the delisting process is expected to be completed in mid-June this year.

In a media conference yesterday, Nazir said the privatisation was timely given Astro’s business evolution as i t created a more conducive shareholding and operating structure to support the company’s future high capital expenditure requirements and long gestation period.

“We believe the deal offers minority investors an attractive price while not subjecting them to the associated risks of the company’s next growth phase,” he said.

Nazir added that given the complexion of Astro’s business, the stock was not properly valued by the market.

The offer price of RM4.30 represents a 21% premium over its presuspension closing price of RM3.56 on Marc h 15.

This deal mirrors Ananda’s privatisation of Maxis Communications Bhd in 2007 following a progression of investments in India and Indonesia.

“I think the deal is quite fair and generous. We are talking about current money. Some people may say that you get better value in the future, but who actually knows?” said JF Apex Securities Bhd chief operating officer Lim Teck Seng.

Another media analyst feels that the price is fair given current uncertain market conditions.

“Of course you can’t please everybody. This price has also been bandied around for a while. So I think shareholders should be happy,” said the analyst.

Meanwhile, Astro Holdings shareholders, which are Usaha Tegas Sdn Bhd and affiliates, Khaz anah and Bumiputra Foundat ions, which collectively hold 72.9% of the existing shares in Astro, have no plans to sell down their stakes in the privately held entity.

“They want to invest in the business with the vision of making it an integrated media group. There is no back-to-back deal,” said Nazir.

On whether there was a chance for Astro to be relisted, Nazir said: “There is a Maxis template. Astro will consider it in future. Period.”

Astro’s privatisation will pave the way for enhancement and expansion of product offering in Malaysia which includes high-definition (HD) service, news channels and digital media.

“The privatisation will lead to the opportunity to accelerate domestic and international growth. The capital expenditure moving forward is substantial. The estimated requirement is RM3bil to RM3.5bil. Half will be for the domestic market, while the other half is for its overseas markets,” said Nazir.

For the domestic business, this would entail capital investment for the multi-phased innovative features including HD and additional related content cost.

For the international business, this would entail additional utilisation of capital for further investment to accelerate investment in its existing business in India, China and also new initiatives such as Internet protocol TV (IPTV) in Australia, the Middle East and North Africa.

“Growth moving forward will be more exciting. It is a bet the major shareholders are taking,” said Usaha Tegas group treasurer Lim Ghee Keong.

In Malaysia, Astro offers pay-TV services, commercial radio, TV programming and other related media content.

In India, Astro through its partner SunDirect Pay-TV has investments in content initiatives.

In Hong Kong, through Celestial Pictures, it owns the world’s largest Chinese movie library.

In Australia, it has invested in an IPTV company through Fetch TV.

Astro has also entered into a joint venture with Saudi Telecom and other partners to create content for IPTV and other devices and platforms in the Middle East and North Africa.

The board has also appointed Public Investment Bank Bhd and JPMorgan Securities (M) Sdn Bhd independent financial advisers.

 
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