PEFs face trouble exiting from indebted pay TV provider
Shareholders of South Korea’s pay television service provider D’Live are now facing an imminent threat of default, as they struggle to sell off its shares to a market competitor.
Courtesy of D'Live
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D’Live shares have been up for sale since 2016, in order for its shareholders to exit and pay back to a group of their debtholders before the bonds worth 1.4 trillion won (US$1.24 billion) mature in June.
But the shareholders, owning over a combined 95 percent of D’Live through a special purpose company, had stopped short of finding a buyer for years. The shareholders include private equity firms MBK Partners and Macquarie Korea Opportunities Management.
The concerns resurfaced as KT Corp., a state-owned company dedicated to telecom and IPTV services, was rumored to have walked away from D’Live acquisition amid concerns about a possible breach of antitrust compliance. A company spokesperson declined to comment on the matter.
KT earlier in February had withdrawn plans to have its direct subsidiary and satellite broadcasting provider KT SkyLife buy D’Live, one of Korea’s five multiple system operators for pay TV service.
KT and KT SkyLife have a combined 31 percent market share in domestic pay TV market as of end-June 2018, according to data compiled by the Ministry of Science and ICT.
If the D’Live acquisition is put in place, KT would have a market share of 38 percent in the entire pay TV market in Korea. The figure goes beyond the regulatory threshold of 33.3 percent, which in 2016 barred SK Telecom from buying CJ Hello. SK Telecom wholly owns SK Broadband, another pay TV service provider.
Korea is home to some 20 pay TV service providers, including three IPTV service providers, a satellite broadcasting provider, five multiple system operators, as well as individual system operators.
In 2007, an SPC led by PEFs MBK Partners and Macquarie’s Korean unit had leveraged some 2.2 trillion won to buy D’Live, but it ran into a delinquency threat as its maturity loomed. The shareholder in 2016 was granted three-year extension for 1.4 trillion won worth of bonds and 800 billion won debt-to-equity swap, from 21 debtholders such as Shinhan Bank, KEB Hana Bank and the National Pension Service.
D’Live’s EBITDA in 2017 came to 208.2 billion won, while its operating profit reached 78.3 billion won, up 8 percent on-year, according to a financial statement.
By Son Ji-hyoung (firstname.lastname@example.org)