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e.tv SEEKS LICENCE CHANGES TO GET AN EQUITY PARTNER

Johannesburg – Midi Television, the holding company of e.tv, is finally seeking amendments to its licence from the Independent Communications Authority of SA (Icasa) to allow the free-to-air television station to bring in an equity partner. An Icasa official confirmed yesterday that Midi had filed an application to obtain certain licence amendments, and that the regulator had since requested further information before publishing it for public comment. If successful, the application would give Midi the regulatory flexibility to introduce strategic investors, which would be able to inject capital into the station when needed. Josua Malherbe, the chief executive of Venfin, said recently the company, which has previously advanced loans to recapitalise e.tv, was eager to turn its loans into equity. Hosken Consolidated Investments (HCI), which is the controlling shareholder of Midi, has to date drawn loan funding of more than R600 million from Venfin in three different stages. The loans were drawn either by HCI directly or through Sabido Investments, an entity created back in 1999 to accommodate ownership changes after Midi’s minority empowerment shareholders defaulted on their funding commitments. The earlier loans drawn in batches of R38.6 million and an interest-free R281.8 million were advanced to HCI-controlled Sabido last year and in 2000, respectively. Venfin has previously equated the two loans to a 26 percent equity stake in e.tv. In January this year, HCI took an additional interest-bearing loan of R280 million from Venfin, which it used to acquire a 12 percent stake in Midi from former owner US group Warner Brothers International. HCI fully secured the latter loan with its 5 percent stake in cellphone operator Vodacom – in which Venfin also holds a 13.5 percent stake. e.tv needed about R100 million in further capital investment for it to break even in May next year, according to an HCI official. HCI issued a cautionary note last week, believed to be related to a fundraising transaction and its share price went up 8 percent, or 15c, to R2 on the JSE Securities Exchange. The stock closed unchanged at R2 yesterday.

Source: Business Report – Nathi Sukazi