UK satellite broadcaster BSkyB has confirmed that KirchPayTV, in which it holds a 22% stake, has today filed for insolvency due to illiquidity and huge debts.
The insolvency comes because KirchPayTV’s investors are now unwilling to offer any more funds whilst the business looks for additional financing. This is despite reports that there were a number of parties interested in taking a stake in the business, run under the name of Premiere World (see
Kirch Pay-TV Receives Suitor Interest, Says FT Deutschland).
BSkyB has the right to exercise a put option in respect of its 22% stake in Premiere World at any time after 1 October 2002. If exercised, the option would require Kirch to buy back BSkyB’s shareholding for E1.3 billion in cash. However, given KirchPayTV’s current financial position, Sky says it is not expecting to receive a ‘significant amount, if any’, in the event that it does exercise the put option.
In February, the satellite broadcaster wrote off its entire £1 billion investment in KirchPayTV (see BSkyB Growth Beats Expectations).
