SKT Sky Network Television Limited.

[mistaTea]

rights issue?

I will assume you are asking what a rights issue is.

A rights issue is essentially a capital raise from existing shareholders. The company work out how much money they want to raise, and do so by issuing new shares to existing shareholders.

So shareholders who want to maintain their current % ownership of the business will exercise their rights and will buy the new shares. Shareholders who don't want to participate (or don't have the $$$ to do so...) forgo their option to buy the new shares and their ownership % is diluted correspondingly.

Assuming the raised capital is used effectively, then exiting shareholders who are able to exercise their full rights are not any worse off (and actually most likely end up better off long term).

However, with the SP being so low...those that are unable to participate could see their shareholding diluted so much that they end up worse off. So if they do go down this path it will be interesting to see how they structure it.

This is another reason why Sky being taken private would probably be best for the company. The current SP has completely divorced from earning power. But because the market cap is so low...it makes it impossible for them to secure new finance on decent terms. As has been pointed out, existing debt is higher than the value the market has put on the entire company. So what bank would want to lend more money to a company like that?

The ever-falling SP has been a self-fulfilling prophecy in many ways. If Sky was not a listed company I believe they would have a much easier time of it with their debt facilities.

Based on current Market Cap, a buyer could pay $335M to buy the entire company and clear all of the debt. Projected underlying earnings would have Sky earn the new owner the $335M back in 5 - 7 years.

Ok, so a buyer would not be able to buy the whole company for the current SP - they would need to pay a premium for control, and the price paid would ultimately need to be somewhat reflective of the value of the rights held etc.

But with the SP being in the toilet for so long, many existing shareholders will have been softened to the idea of selling the company for less than it is objectively worth.

[steveb]

How is sky in the uk doing?

[winner69]

Wonder what a “merged’ Sky/Vodafone would have looked like today?

[mistaTea]

Wonder what a “merged’ Sky/Vodafone would have looked like today?

Yeah, as things have transpired it has made the Comcom decision look even more questionable in my view.

I remember at the time Fellet and co got a bunch of flack for the proposed merger - commentary along the lines of Sky management waking up one day and thinking "OTT SVOD has arrived, we have no idea what to do about it...oh, I know! Let's do a merger!". As though it was a knee-jerk, panic move.

In reality, merging with the likes of Vodafone was a well considered plan to ensure the company's reslience as a value-add in the age of fast internet.

But what is done is done. As they say - wish in one hand, sh1t in the other - see which one fills up first!

I think a capital raise at this point in time would be too destructive in wealth to those shareholders who have supported the business over the years yet would not be able to participate.

My hope is that they can either:

1. Issue new bonds on reasonable terms to refinance the maturing $100M
2. Pay back the maturing $100M bonds using working capital and the remainder of their existing banking debt facility (which drops to $150M in July 2021.)
3. Actively work with the investment banking community to locate some buyers. Infratil, Foxtel, NBC, DAZN etc would all be viable candidates. With a large parent owning the company privately, refinancing debt would no longer be an issue.

On one hand I would be gutted if another NZ company was taken private (potentially by an overseas corporate) but the constant barrage of negative media commentary and general sentiment in the markets has potentially forced this outcome.

[mistaTea]

How is sky in the uk doing?

With Comcast as their new owners, I imagine Sky TV UK are fine and dandy.

[macduffy]

I will assume you are asking what a rights issue is.

I don't think so. Moimoi has been a member longer than any of us - since 2000! I think he/she was mulling the likelihood of a rights issue at this time.

[mistaTea]

I don't think so. Moimoi has been a member longer than any of us - since 2000! I think he/she was mulling the likelihood of a rights issue at this time.

In which case, sincere apoligies for teaching anyone how to suck eggs!

[mistaTea]

Just increased my existing position by 12 percent @26c per share.

Unbelievably cheap at these prices in my view. But then I have been buying for the last couple of years and I keep saying that!

[blackcap]

Well done SKY for coming to the party. From the 25th March, they are giving me 3 months of the movie channel for free. That is a good move because i was nearly gone. So I will hang around a bit longer.
Not surprised they took this move but a little perplexed it took this long.

[blackcap]

Just increased my existing position by 12 percent @26c per share.

Unbelievably cheap at these prices in my view. But then I have been buying for the last couple of years and I keep saying that!

Make sure you keep some powder dry for the inevitable capital raise. 1:1 at 15 cents to raise $60m is not out of the realms of possibilities.