Sydney, Australia -- Australis Media, the financially
troubled wireless-cable operator, appears to have pulled off the survival story of the
decade, this month seeking Chapter 11 protection against bankruptcy in the United States
and negotiating a debt reduction with its bondholders.
The rescue package will also see $A100 million ($US66
million) of new capital and assets put into the company from a consortium led by
Australis' landlords and investors Michael Boulos and Mike Salhani. As the company
filed for Chapter 11 protection in the U.S., it said the majority of its bondholders had
agreed to reduce their debt to $US375 million from $US445 million.
The company will receive $A100 million of capital and
yet-to-be disclosed assets from the new investors, conditional on acceptance of the debt
restructuring by bondholders. Industry sources told Multichannel News that the
assets will include the sale of U.S.-based Century Communications Corp.'s Australian
interest, East Coast Television, to Australis Media. Century in February reported in U.S.
Securities and Exchange Commission filings its Australian assets to be worth $US27
million. East Coast and Century executives were unavailable for comment.
The Boulos Consortium will approve a business plan that
will see Australis move back into subscriber acquisitions and other areas of its business
scaled back due to the financial difficulties, according to company secretary Ross
McReath. Australis is also expected to relist its shares on the Australian Stock Exchange
after the restructuring is completed.
Australis said the restructure should be achieved by June
15.
"The U.S. legal procedure, which has been supported by
our bondholders, allows the group to protect its assets and to proceed with an orderly
reorganization and restructuring of debt over the next few months," Australis
chairman Rod Price said. "Subscribers to Australis Media's Galaxy service will
be unaffected during the process, as will the staff, non-bondholders and creditors of the
group."
Industry observers and analysts say the moves don't
necessarily secure the long-term future of the company. They also raise questions about
the future of News Corp.'s cable-systems company Foxtel. That company, along with the
telco Telstra, has a $US4.5 billion, 25-year output agreement with Australis. The
agreement largely favors Australis.
Sources have suggested for some time that Boulos'
connections with The Philippines' wealthy Lopez family would see Filipino money come
into the company. But sources close to bondholders say the Lopezes have denied an interest
in Australis Media.
