Largest Greek Pay-TV Firm Mulls Bond Sale as Takeover Bids Stall

Panos Papadopoulos
The company, which is the subject of two separate bids from Deutsche Telekom AG and Vodafone Group Plc, is considering issuing a 100 million-euro ($113 million) convertible bond, Forthnet SA's Chief Executive Officer Panos Papadopoulos said in an interview Thursday. Source: Forthnet SA

Forthnet SA, Greece’s largest pay-TV provider, is speeding up talks with creditors on refinancing, its chief executive officer said.

The company, which is the subject of two separate bids from Deutsche Telekom AG and Vodafone Group Plc, is considering issuing a 100 million-euro ($113 million) convertible bond, Panos Papadopoulos said in an interview Thursday.

“For the last few weeks, we have been in discussions with the banks based on our revised proposal and we hope to reach an agreement soon,” Papadopoulos said.

Forthnet, which on May 4 signed the extension of an agreement to air the Greek soccer championship until 2019, is in talks with Greece’s three biggest banks, National Bank of Greece SA, Piraeus Bank SA and Alpha Bank SA, for a plan to refinance its debt by issuing bonds.

The company’s net debt stood at 324 million euros in short-term borrowings at the end of 2014. Its shares have fallen 11 percent so far this year, giving it a value of 87.9 million euros.

Deutsche Telekom’s Hellenic Telecommunications Organization SA submitted a non-binding offer of 300 million euros for the purchase of the company’s pay TV service, Nova, on July 7 last year. Ten days later, a consortium of Vodafone and Wind Hellas Telecommunications submitted a joint non-binding offer of 1.70 euros to 1.90 euros per share.

The due-diligence process was completed at the end of 2014 for Hellenic Telecom and at the beginning of this year for the Vodafone group, though neither has moved forward to submitting a binding offer yet.

Economic Uncertainty

“We have submitted all information that they requested and it’s now up to the interested parties to analyze and move forward with their next steps,” Papadopoulos said. Forthnet assumes that uncertainty over Greece’s economic situation has affected the decisions, he said.

“These offers confirmed our strategy,” Papadopoulos said. The company introduced its triple play service, which includes phone, Internet and pay-TV services, in 2013. Pay-TV subscriptions rose 12 percent, reaching 507,261 at the end of last year, according to the company’s financial statement.

Vodafone Group already owns a 6.5 percent stake in the company, after participating in its capital increase in 2013, while the main shareholder of Forthnet is Emirates International Investment Co., with a 44 percent stake. Hellenic Telecom is Forthnet’s main competitor in pay-TV service in Greece.

A spokesmen for Vodafone declined to comment and Deutsche Telekom referred inquiries to Hellenic Telecom, whose spokeswoman also declined to comment when contacted by phone.

Cash Flow

Forthnet is scheduled to announce first-quarter earnings at the end of May. The company’s top priority remains securing its short-term cash flow and its financing, according to Papadopoulos.

“The demand is a given, but in this environment we have to set more conservative priorities, focusing on our short-term cash flows,” Papadopoulos said. The company plans to return to a more aggressive strategy once the country’s macroeconomic situation improves.

Greece has been in deadlock with its creditors since Prime Minister Alexis Tsipras’s government was elected on Jan. 25, with the country expected to run out of money at the end of this month. Deposit outflows in Greek banks and lack of liquidity in the real economy has caused distress for businesses in the country.

“We also experience the uncertainty and anxiety of our consumers,” Papadopoulos said. “Our product has proved resilient to the Greek crisis and we haven’t noticed any changes in our clients’ payments,” he said, saying that he’s optimistic the country’s negotiations will have a positive conclusion.

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