KirchMedia – the TV sporting rights unit of ailing German media empire Kirch Gruppe – is on the verge of filing for insolvency after talks between creditors and shareholders broke down.
Negotiations faltered over a €150 million bridging ($132m; £92m) loan to keep afloat KirchMedia, which carries the bulk of its parent’s huge debt burden of €6.5 billion to €8bn, for the next eight weeks.
Under a rescue package proposed last week [WAMN: 26-Mar-02], the loan would have been followed by an €800m capital increase under which minority shareholders such as Rupert Murdoch’s NewsCorp and Silvio Berlusconi’s Mediaset would have increased their stakes in the unit.
However, KirchMedia’s creditor banks wanted the minority shareholders to supply 40% of the bridging loan, whereas the shareholders were willing to provide just 10%. Commerzbank and DZ Bank consequently withdrew from negotiations saying that they planned no further meetings with Kirch investors.
Unless a last-minute deal emerges, KirchMedia is expected to file for insolvency this week, perhaps as early as today (Thursday). Insiders at the moribund media mammoth say that it does not have the cash to honour payments due next week.
Under German legislation, if KirchMedia does file for insolvency, an interim administrator would be appointed who would work with its management to determine whether or not it can be rehabilitated.
Data sourced from: Financial Times; additional content by WARC staff