ABS-CBN Corp., the listed television broadcast arm of the Lopez Group, raised an initial P2.5 billion out of a multi-component equity deal that was seen to generate P4 billion to finance investments in digital TV.
Documents filed in the Philippine Stock Exchange on Wednesday showed that the amount was raised after ABS-CBN Holdings Corp. issued Philippine Deposit Receipts (PDRs) to new investor Capital International Private Equity Fund VI, L.P. ABS-CBN Holdings then subscribed to new common shares issued by ABS-CBN.
PDRs, which allow foreigners to invest in certain restricted businesses like media companies, grant holders rights to the underlying share.
ABS-CBN is also set to separately issue P1.5 billion worth of new shares to unlisted Lopez Inc., allowing it to complete the P4-billion transaction.
ABS-CBN chief financial officer Rolando Valdueza said in a briefing last month that the fund-raising exercise was meant for the network’s “distribution platform and one of which is digital terrestrial TV.” He also mentioned other wireless platforms.
It was not until weeks later that ABS-CBN revealed more concrete details, of the plan, including the so-called network sharing agreement with Ayala-led Globe Telecom, the country’s second—biggest telecommunications player.
Based on the agreement, ABS-CBN will act as a traditional telecommunications provider that will deliver its own content to mobile phones and tablet computers of subscribers, a previous joint disclosure showed.
Globe will provide capacity and coverage, which ABS-CBN will pay for, on a nationwide basis. Details on this specific component, however, have yet to be disclosed by ABS-CBN and Globe.
The groups may also share assets such as servers, towers and switches, their disclosure showed.
ABS-CBN said it would invest P2 billion to P3 billion over the next three years in this initiative, which would be launched in the second half of 2013 after obtaining regulatory approvals.
The partnership was branded as a convergence initiative.
Globe rival Philippine Long Distance Telephone Co. had also intended to pursue such a convergence initiative when it attempted but failed to acquire a majority stake in ABS-CBN competitor GMA Network Inc.
PLDT owns TV5, the country’s third-biggest television network.