TVB’s HK$4.21b share repurchase plan back on track after TLG ‘disruption’ ends
Television Broadcasts’ HK$4.21 billion (US$542 million) share repurchase plan is back on track following an end to the “disruption” triggered by Beijing’s TLG Movie & Entertainment Group, said Mark Lee Po-on, chief executive officer of Hong Kong’s dominant free-to-air TV broadcaster.
TVB’s plan stalled when it failed to get approval from the city’s market regulators to issue the offer document after little known TLG announced a potential bid to buy a 29.9 per cent stake in the 49-year-old broadcaster on February 7.
“We had deferred the issue of the share repurchase document several times, partly due to the disruption,” Lee told the South China Morning Post on Wednesday.
The hurdle was removed on March 7 when TLG sent a notice to TVB and Hong Kong’s Securities and Futures Commission (SFC) saying that it decided to abandon its proposed bid.
“We are now in discussion with the Hong Kong exchange and the SFC to confirm the date to issue the document,” said Lee.
“Once the document is issued, the company can confirm the date of an extraordinary meeting on the voting of the share repurchase proposal,” he said, adding that the document is expected to be issued by the end next week.
TVB offered to buy back 31.51 per cent of the company’s shares for HK$4.21 billion in January.
TVB is 26 per cent owned by Young Lion, which is controlled by the broadcaster’s chairman Charles Chan Kwok-keung. Mainland businessman Li Ruigang and HTC Corp chairwoman Wang Hsiueh-hong also own stakes in Young Lion.
TVB raised the buy-back offer price by 15 per cent to HK$35.075 in a bid to thwart TLG’s bid on February 14.
Lee refused to comment on the repurchase plan but did say: “Generally a share repurchase can enhance the company’s earnings per share. That is good for shareholders.”
However, he said what was proving harmful to minority shareholders was the fluctuation in TVB’s share price, which was seen in the past month after TLG announced a potential bid but dropped the plan without providing sound reasons.
Lee described the moves by TLG, founded by Alex Chow, as “not ethnical” and a “drama”. He called for the stock market regulators to impose a threshold for third parties to make a proposed offer.
“At least they should have financial proof or they should submit a deposit for the potential offer,” Lee said.
“If they drop the offer without a sound reason, the regulator should impose penalties. However, there is no such threshold required according to the city’s existing takeover code,” he said.
According to Hong Kong’s existing takeover code, the potential bidder may be required to show evidence that they have sufficient resources to complete the purchase of shares. The SFC declined to comment on Wednesday.
In December TVB issued a profit warning, saying that its full year 2016 earnings may shrink by as much as 65 per cent year on year on lower advertising revenue.
The broadcaster, which booked a profit of more than HK$1.3 billion in 2015, will announce its full year results on March 29.
Lee said the business environment is still challenging but that would not stop the company from expanding.
“TVB now has about HK$7 billion in cash and the company will retain about HK$3 billion for business expansion if the proposed share repurchase proceeds. We will definitely continue to expand,” Lee said. Shares of TVB fell 3.68 per cent to HK$32.70 on Wednesday.