ITI hopes to raise $130 million

Media firm ITI Group said last week it hoped to raise up to $130 million when it floats on the Warsaw Stock Exchange in July, challenging a weak market for new economy stocks to launch Poland's largest offering in two years. ITI, parent of broadcaster TVN and best known for the Polish version of the "Big Brother" reality show, will become the second media group to go to market in Poland after Agora, owner of the top-selling Gazeta Wyborcza daily, listed in 1999. The oft-delayed float of ITI, with interests in multiplex cinemas, TV and film production and an Internet portal, will be the most high profile in Eastern Europe this year and an acid test for markets plagued by shrinking turnover. "The time has come to take the risk," said ITI cofounder and chief executive Jan Wejchert. "We hope to be the first company on the bourse to break the stagnation. We want to tap the market for as much as $130 million. I hope that investors will see that we are a healthy company with healthy growth." ITI said in its issue prospectus it would offer up to 110.6 million shares, including 68.4 million new and 42.2 million existing shares between June 19-July 2. That represents a 48% stake, but the final figure is likely to be lower and depends on whether holders of ITI's convertible bonds exercise their right to swap debt for equity.

Analyst concerns With the issue coming amid a savage bear market in media and tech stocks, analysts said there were concerns about pricing and the complex structure of the company. "This is a company of a complex conglomerate structure and that is why it will be hard to estimate its real value," said Ewa Radkowska, a portfolio manager at ING Investment Management. "Market sentiment is not that upbeat either, but what can drum up demand is that it is going to be a large company with some decent liquidity, which is key right now." Analysts estimated ITI's value at more than $620 million, based on the company's goal of raising at least $80 million for 12% of new shares - a price some saw as rich compared with Agora's $800 million market capitalization. But ITI said those figures were pure speculation, as it could increase the number of new shares offered to retail investors after most holders of the company's convertible bonds rescinded their rights to exchange the debt into equity. "We can move some of the 33.5 million shares previously earmarked for bondholders, but the exact number will be known after the book-building process," said Bruno Valsangiacomo, ITI's deputy chief executive. In addition to bondholders giving up conversion rights, the final offering could be smaller if current owners decide not to sell the maximum allowed amount of old shares. ITI will announce the float price in the week of July 1, with trading to open on July 12.

Moves to boost valuation ITI grew group sales by 13% to $134.4 million last year despite a shrinking advertising market. But heavy investments slashed the bottom line to a $12 million loss. Management has responded to investor concerns about a lack of transparency in the group's structure by tightening control over key subsidiaries. ITI struck a deal with SBS Broadcasting to buy the 33% of the flagship TVN channel it does not already own, with the $150 million deal to be mostly funded out of the IPO. TVN, which also airs the Polish version of the "Who Wants to be a Millionaire?" quiz show, had a 20% share of Poland's television ad market in 2001, compared with 30% for the more downmarket Polsat and 40% for two public channels. EBRD holding Pekao shares The European Bank for Reconstruction and Development (EBRD) has no immediate plans to dispose of its small stake in Poland's largest listed Bank Pekao, said Hanna Gronkiewicz-Waltz, an EBRD deputy head, last week. Recurring speculation that Europe's development bank could offload its nearly 11 million shares, or 6.6%, in the lender after its share price more than doubled since the 1998 float has in the past hurt the Warsaw bourse's second-largest issue. The EBRD, which committed substantial funds during the wide scale privatization in the Polish financial sector in the last decade, would also hold on to its 30% stake in Warsaw-listed steel trader Stalexport, she said. - Reuters