Europe’s biggest newspaper publisher Axel Springer is threatening legal action against KirchMedia, the insolvent broadcast rights arm of ailing German media giant Kirch Gruppe.
Relations between the two have soured since Springer decided to exercise a ‘put option’ forcing Kirch to buy back its 11.5% stake in broadcaster ProSiebenSat.1 for €767 million ($701m; £478m) – a price well above its current market value [WAMN: 31-Jan-02].
The decision to claim the money helped trigger the cash crisis that engulfed Kirch and prompted the insolvency of its KirchMedia unit last month [WAMN: 09-Apr-02].
Springer has now vowed to resort to the courts after KirchMedia failed to meet the deadline for the payment.
The newspaper group is preparing a suit which will seek one of two different resolutions. It wants either to be paid the full €767m for the ProSieben holding, or to retain its stake plus around €500m in compensation – roughly the difference between the value of the ‘put option’ and the current market value of the shares.
However, Kirch does not seem unduly worried. Declared a spokesman: “Putting aside for the moment our legal misgivings about the validity of Springer’s put option [which Kirch claims Springer nullified], Springer’s claim will now have to be dealt with under the terms laid down in insolvency law.”
Data sourced from: Handelsblatt (Germany); additional content by WARC staff