Charles Chan Kwok-keung will end up with a significant minority interest in Galaxy Satellite Broadcasting through an equity swap involving multimedia electronics maker Ruili Holdings and his 22.48 per cent-owned Hanny Holdings.
Trading in shares of both companies was suspended yesterday pending an announcement of the transaction details.
On Monday, Television Broadcasts announced it would sell 49 per cent of the wholly owned pay-television unit to Ruili and a further 2 per cent to Mr Chan for a combined $350 million.
Informed sources said Ruili - which has a market capitalisation of just $146.44 million - planned to issue new shares or convertible bonds to finance its purchase of the Galaxy stake. Hanny reportedly will subscribe to the new shares, raising its interest in Ruili and, by extension, Galaxy.
The TVB sale values Galaxy at about $700 million, far less than the US$150 million Malaysia's Astro Broadcasting was willing to pay in an abortive deal in 2000 that would have valued Galaxy at $2.92 billion.
In 2003, TVB sold a 51 per cent stake in Galaxy to Intelsat for $542 million, valuing the loss-making pay-television firm at $1.06 billion.