TopTV in 'business rescue', needs cash

2012-11-01 08:45
Cape Town - On Digital Media (ODM), who is currently running the TopTV pay-TV platform in South Africa, has gone into "business rescue" under the Companies Act, saying that the pay-TV company urgently needs cash - preferably from a South African industry player.

The TopTV board has been looking into the future and feels that the pay-tv platform might possibly have problems in meeting its current payment obligations due within the next six months.

TopTV, which started a major turnaround process with new interim CEO Eddie Mbalo earlier this year, says that the bottom-line of the struggling pay-TV business has improved, and that TopTV is "in the strongest position the company has been in since inception".

Yet the company is facing financial difficulty and now needs business rescue under section 129 of the new Companies Act to "provide a protective bubble around the company and buy it some time to complete the search for a strategic equity partner".

'A precautionary measure'

However, TopTV have taken to calling this "a precautionary measure". The company says that they will continue to "function as normal" but refers to operating its pay-TV business as "continuing our battle".

TopTV needs more money urgently and has struggled to find a business partner willing to make a large cash injection into South Africa's second pay-TV business which started its commercial operations in May 2010.

"The business has always required a significant cash injection to recapitalise it in order to complete the turnaround and take the business to the next level of competitiveness," said Mbalo in an unexpected statement released late on Wednesday.

"The board, management and staff at TopTV are committed to the company, and we are determined to work together as a team to make it a successful business," said Mbalo.

"Good progress not withstanding, and as part of the turnaround process and good corporate governance, the board of directors of On Digital Media, the holding company of pay-TV operator TopTV, regularly assesses whether the company is in a position to meet its current obligations and those due within the next six months."

Protective bubble to buy some time

"Based on this ongoing assessment and precipitated by the difficulty in finding an appropriate partner, the board has prudently opted to adopt the provisions of business rescue as per the new Companies Act.

"This will provide a protective bubble around the company and buy it some time to complete the search for a strategic equity partner. The company will continue to function as normal," said Mbalo.

Now TopTV is making a public plea for a business partner - hopefully a South African one - with deep pockets.

"The best source of such a cash injection would be a current industry player," the company said in the statement.

TopTV providing healthy competition

"Such a partner would also be in a position to assist with other required strategic resources that would take time for TopTV to accumulate.

"Due to the competitive landscape locally and the legislative requirements that allow a foreign entity only a 20% share in ownership, the process of finding an appropriate partner has proved challenging for the start-up business."

"It is still very much business as usual at TopTV," the company assured in their statement.

"While we are taking precautionary measures and being prudent with our current cash reserves, the board has taken this decision to ensure the long-term sustainability and growth of the company."

TopTV has been providing healthy competition for Multichoice's pay-TV platform DStv.

"We further believe that this decision will cement our commitment to transparent business practices while we continue our battle on what we hope will become a more transformed landscape and a level playing field," the company said in the statement.

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