BSkyB pushes Kirch towards meltdown

A decision by BSkyB to hand back its stake in bankrupt KirchPayTV could push the Kirch holding company into insolvency.

  • E-Mail
By  Marcus Webb Published  May 14, 2002

BSkyB has pushed the Kirch empire to the brink of total collapse after it brought forward an option demanding the media conglomerate repay US$1.5 billion, money Kirch does not have.

BSkyB has a 22% stake in the KirchPayTV operation, and has decided to exercise its put option on the money.

BSkyB had a clause in the shareholder agreement with Kirch parent group Taurus Holding allowing it to demand the German media conglomerate buy back the shares in October, but the broadcaster was forced it to bring that date forward.

"Certain circumstances have occurred which have enabled the group to exercise the put option," said BSkyB.

However, BSkyB said it did not expect to get its money back from the former media concern that has buckled under the weight of a $5 billion debt burden.

"It should be noted, however, that if the current liquidity issues of Taurus Holding are not adequately resolved, the group believes that it is unlikely to receive a significant amount, if any amount, as a result of its exercise of the put option," said BSkyB.

KirchPayTV has already filed for insolvency, but BSkyB's action makes bankruptcy of the umbrella group inevitable, industry sources told Reuters news agency.

KirchMedia, the group's programme rights and free TV arm, was declared insolvent at the beginning of last month.

Meanwhile, Leo Kirch is suing Deutsche Bank's chief Rolf Breuer for precipitating the collapse of his media empire.

Kirch claims that Breuer caused KirchMedia's insolvency by publicly calling into question the financial status of the group in an interview on the sidelines of the World Economic Forum in New York.

According to Kirch's lawyers, Breuer's comments comprised a serious betrayal of business secrets and unauthorised disclosure about the Kirch group's credit lines.

Kirch claims this made subsequent refinancing negotiations much more difficult and is claiming $90 million euro in damages.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code