Mystery mainland buyer in bid to control TVB

Top News | Carrie Chen and Esther Yu 9 Feb 2017

Television Broadcasts said yesterday it has received a letter from a mysterious mainland buyer who plans to acquire a controlling stake of 29.9 percent in TVB, involving about HK$4 billion.

The letter was sent by TLG Movie and Entertainment Group on Tuesday, saying that it is in formal discussions with TVB shareholders on possibly acquiring a stake.

The proposal is subject to two conditions: it should receive approval, or have no objection from, the Communications Authority of Hong Kong.

In addition, the repurchase of 138 million shares at HK$30.5 per share and the application for a whitewash waiver from Young Lion Concert Party Group, both of which were announced on January 24, should be voted down by shareholders.

A more specific announcement of the proposed offer is expected to be made during the week of February 20, according to the filing with the stock exchange.

But an hour after the first announcement was made by TVB, the broadcaster issued another statement saying "the possible purchaser is not known and the identity of the ultimate beneficial owner, its source of funds and proof of financial soundness have not been disclosed to TVB."

TVB said it will take steps to evaluate whether the proposal is credible and capable, and whether TLG has adequate financial resources.

TLG shareholders are Geoffrey Wai Ho-choi, non-executive director of TLG (HK) Holdings, and Kelvin Dong Wei-tsun, director, according to the first filing.

Headquartered in Beijing, TLG (HK) operates in Hong Kong and Shanghai, according to its official websites.

The firm's focus is cultural industry and real estate development, including investments in entertainment media, cultural real estate and mergers and acquisitions.

In October 2015, the firm was reported to be planning to spend 3.5 billion euros for a stake in English Premier League giants Manchester United. But no further news of the plan materialized.

The Hong Kong purchase, if approved, would make the mainland firm the largest shareholder of the free TV station operator.

The current major shareholder, Young Lion, controlled by TVB chairman Charles Chan Kwok-keung and Chinese media mogul Li Ruigang and HTC chairwoman Wang Hsiueh-hong, has a 26 percent stake on hand.

TVB proposed a HK$4.2 billion buyback program last month, in which Young Lion would see the stakes held increased to 37.96 percent should the plan be approved by vote in a shareholders' meeting.

Share prices have been up more than 11 percent since the announcement. But the firm issued HK$3.9 billion (HK$29 billion) worth of bonds last October, so the buyback translates to using the money to back the major shareholder's funds. It is not the first time that mainland capital has entered the SAR free- to-air TV license holder. When Li Ruigang invested in TVB's major shareholder Young Lion, controversy was sparked over whether a mainlander should hold a stake on the local media firm. The move was later approved by chief executive Leung Chun-ying.

Run Run Shaw, founder of TVB, sold his 26 percent stake to Young Lion, which was then made up of Chan, Wang and a private fund.

Caster Pang Wai-sun, head of research at Core Pacific-Yamaichi, said there could be genuine interest from the mainland firm.

"If it is an acquisition by a local firm, it may not be meaningful," he said, " but TVB is seen as an established network with video content and talent."

The Chinese firm could also use the station to channel its content.

"TVB actors also have their business value in the mainland," he added.

Shares of TVB will resume trading today.

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