Television Broadcasts (TVB)

TVB shares slip on trade resumption as buy-back hopes dim

Doubts grow over broadcaster’s offer to buy back 31.5 per cent of its shares for HK$4.21 billion

PUBLISHED : Monday, 15 May, 2017, 11:36am
UPDATED : Monday, 15 May, 2017, 10:41pm

Doubts around Television Broadcasts’ proposed share buy-back hit the broadcaster’s shares on Monday as trading in the stock resumed following a two-week suspension.

The stock opened at HK$27.90 in the morning, 6.7 per cent lower than the last traded price on April 27. It recovered slightly afterwards but still closed 4.3 per cent down at HK$28.60.

Analysts saw the decline as investors’ response to the reduced likelihood of a share buy-back by the broadcaster.

Trading had been suspended, pending a ruling from the Securities and Futures Commission’s takeovers and acquisitions panel regarding the proposed buy-back.

“The price was down because investors see a buy-back as being less likely after the panel’s ruling and TVB’s statement,” said Louis Tse Ming-kwong, director of VC Brokerage.

In a statement to the Hong Kong stock exchange on Friday, TVB said there was no certainty that the buy-back offer would proceed.

In January, the firm offered to buy back 31.5 per cent of its shares for HK$4.21 billion (US$540 million).

Tse said this had proved contentious because of the low offer price and because it would concentrate control in the hands of the largest shareholder, Young Lion Holdings, controlled by Chinese media magnate Li Ruigang.

Young Lion has indicated it will not take up the buy-back offer, which would see the stake in TVB held by the group and its affiliates rise to 41.19 per cent.

Last week, Silchester International, TVB’s second largest shareholder, repeated its demand that the buy-back be cancelled and a special dividend paid to minority shareholders instead.

Minority shareholder urges TVB to cancel its buy-back offer

Under normal circumstances, the increase of the TVB stake held by Young Lion and its partners to 41.19 per cent would trigger a mandatory offer for all the shares in the broadcaster.

As such, they sought a so-called “whitewash waiver” from the SFC to relinquish such an obligation.

The commission’s panel ruled that the waiver should be granted so long as the resolution to approve the buy-back gained a majority of votes cast at the company’s general meeting and the full details of the shareholding structure of Young Lion be disclosed.

The panel also said the waiver should not be put before TVB shareholders for a separate vote on the offer.

“Because some shareholders are against the buy-back, the requirement that it be put to shareholders at a general meeting means it is less likely to be approved,” Tse said.