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Reuters: TV3 dips to record low
By Benjamin Low

10/4/2001 5:53 am Tue

[Saham TV3 menjunam 28.8% hari ini untuk mencecah keparas terendah 42 sen se saham sejak ia ditubuhkan pada tahun 1988. Ia bercadang untuk membayar cuma 70% sahaja hutang. Jika tidak ia mungkin tertenggelam...

Bagi reformis - ini petanda laungan dan perjuangan selama ini sudah pun mengena sasaran.
- Editor

Monday April 9, 6:57 PM

UPDATE 1-Malaysia's TV3 dips to record low

(Updates with closing share price)

By Benjamin Low

KUALA LUMPUR, April 9 (Reuters) - Sistem Televisyen Malaysia (TV3) shares slumped to a record low on Monday after the ailing television network operator said it would slash its share capital by half as part of plans to stay afloat.

TV3 unveiled late on Friday a long-awaited plan to repay 714.6 million ringgit ($188 million) of debt including a proposal to reduce its share capital to 85.15 million ringgit, effectively cutting its shareholders' investments by half.

"The successful implementation of the proposed restructuring scheme would mitigate an impending liquidation, suspension and delisting of TV3," the company said in a statement.

But discontent about the capital reduction, which leaves shareholders with half the number of shares they currently own, sent the stock tumbling 28.8 percent to end at 42 cents, the lowest since TV3 was listed in 1988.

On the year, the stock has dropped 61 percent compared with a decline of 18 percent in the key index.

Concern about TV3's debt has hit the shares, making them the second worst-performing on the benchmark Composite Index <.KLSE> in the first three months of the year.

The unprofitable television station had little choice but to cut its capital to offset mounting losses, analysts say.

TV3 has accumulated losses of about 511.5 million ringgit after the country slipped into a recession in 1998, with advertising revenues drying up.

"They had to go through with the capital reduction," said an analyst at a foreign brokerage. "Three parties will have to bear the restructuring."

Those three parties are TV3's creditors, majority owners and minority shareholders -- all of whom will be hurt by the reorganisation plan.


But TV3 may have a tough time getting creditors to accept the plan, analysts say.

"The scheme may also not pass creditors. Thus, the completion of the scheme may be delayed, and the scheme as outlined may yet undergo changes," said KAF Seagroatt & Campbell in a report.

Under the restructuring plan, TV3 is asking creditors to waive 214.4 million ringgit, or 30 percent, of its total debts.

TV3 will repay 133.21 million ringgit of debts in cash while the remaining 367 million ringgit will be swapped for new covertible preference shares and new ordinary shares.

The creditors will then sell some of the shares to TV3's shareholders, who will have to subscribe to the offer.

The sale will be made at a ratio of three ordinary shares and one preference share at 1.0 ringgit each for every four ordinary shares currently owned by shareholders.

As part of the reorganisation, TV3 will sell 75 million new shares to Simpletech Sdn Bhd, a private company controlled by TV3's executive vice chairman Mohd Ibrahim Mohd Nor.

Simpletech will emerge as the television network's new controlling shareholder with a 21 percent stake. Malaysian Resources Corp , TV3's current parent, will see its stake drop to 20.8 percent from 49.6 percent.

Creditors will end up with a 37.1 percent stake while minority shareholders will own the remaining 21 percent of TV3, down from 50.4 percent currently.


But the current slump in TV3 shares may have opened up buying opportunities for investors seeking bargains.

The restructuring will put TV3 on a stronger financial footing, helping it reverse three years of losses. And that will eventually drive a recovery in TV3 shares, analysts say.

"After the restructuring, going forward, the shares could be worth between one and 1.50 ringgit each. You can still make a profit if you buy now," said the foreign brokerage's analyst.