The company’s management team has decided to seek a “business rescue” under section 129 of the new Companies Act. This, it says in a statement issued late on Wednesday night, will provide a “protective bubble” around it and “buy it some time to complete the search for a strategic equity partner”.
TopTV was launched in 2009 and was the only licensee of five operators licensed by the Independent Communications Authority of SA to launch commercial services to take on the long-standing incumbent, which is owned by JSE-listed Naspers. Its founding CEO, Vino Govender, was replaced at the beginning of the year by acting CEO Eddie Mbalo.
“Since the start of the turnaround programme, the bottom line has improved and some limited funding has been sourced and injected into the business,” TopTV says in the statement. “This is the strongest position the company has been in since inception. However, the business has always required a significant cash injection to recapitalise it in order to complete the turnaround and take the business to the next level of competitiveness.”
The statement quotes Mbalo as saying that “South African companies in this space have generally taken between three and four years to make a profit and with far less regulatory and statutory restrictions imposed on them”.
The statement says: “The best source of such a cash injection would be a current industry player. Such a partner would also be in a position to assist with other required strategic resources that would take time for TopTV to accumulate. Due to the competitive landscape locally and the legislative requirements that allow a foreign entity only a 20% share in ownership, the process of finding an appropriate partner has proved challenging for the start-up business.”
The board “regularly assesses whether the company is in a position to meet its current obligations and those due within the next six months”, according to Mbalo. “It is still very much business as usual at TopTV. While we are taking precautionary measures and being prudent with our current cash reserves, the board has taken this decision to ensure the long-term sustainability and growth of the company.”
The statement says On Digital Media’s difficulty in finding an “appropriate partner” has resulted in the board “prudently” opting to “adopt the provisions of business rescue” under the Companies Act. “The company will continue to function as normal, and will continue with its plans to launch a number of exciting initiatives in the lead-up to the festive season.” — (c) 2012 NewsCentral Media