UTV expands alliance with Walt DisneyFebruary 18th, 2008 - 10:07 pm ICT by admin
Mumbai, Feb 18 (IANS) Hollywood media giant Walt Disney Company is poised to invest Rs.13.14 billion ($330.4 million) in two UTV group firms. An agreement has recently been reached between the two groups under which Disney, through its subsidiary The Walt Disney Company (Southeast-Asia) Pvt Ltd will invest Rs.13.14 billion in UTV Software Communications Ltd (USCL) and UTV Global Broadcasting Ltd (UGBL).
UGBL is the parent company for its two wholly owned subsidiaries, Genx Entertainment Ltd and UTV Entertainment Television Ltd. Genx has already launched successfully two youth entertainment channels through the Bindass brand while the latter just launched The World Movies channel and is about to start UTV Hindi Movies channel.
Roma Patel, chief financial officer of UTV Group, told IANS Monday that the transaction would be done through a preferential allotment to Disney in keeping with the requirements of the Indian markets regulator, Securities and Exchange Board of India (SEBI).
The company would also keep its shareholders informed by a public announcement. The deal and the open offer of Rs.1.19 billion is subject to regulatory and shareholder approvals.
The agreement, once sealed, will help Disney increase its stake in UTV from 13.7 percent to 32.1 percent.
Disney will invest about Rs.8.05 billion in USCL. The company has also acquired 15 percent stake in UGBL, worth Rs.1.19 billion.
Besides, the Hollywood major has also promised UTV with Rs.3.90 billion in the form of warrants (bonds).
As part of the transaction, the number of UTV shares to be issued to Disney is 9,352,500 at Rs.869.70 per share.
Ronnie Screwvala, as founder-promoter of UTV, will consolidate the promoter’s stake in the company with 4,532,000 shares.
As for UGBL, UTV will control 75 percent stake in the company investing Rs.2.4 billion and give away only 15 percent to Disney against its investment of Rs.1.19 billion. The Ronnie Screwvala Promoter Group will hold the remaining 10 percent.
Screwvala said that Disney’s investments and the money coming in after divesting a part of its stake would be utilised in movie and animation projects. “In about a month’s time, we will finalise the plans we have already drawn up,” he told IANS.
Screwvala discounted fears that dilution of the stake would endanger his hold on the company. He was confident that Disney’s international fame for its animation movies would be helpful for the animation projects of UTV.
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