ITI mulls IPO as alternative to bond issue

by Timothy Sifert

While some local debt investors mull the viability of an ITI Holdings €150-million (zł. 666-million) bond issue, company executives are still considering other options for financing the firm's purchase of the remaining stake in TVN - including taking a second stab at an initial public offering.

"We have not decided yet," said Paweł Kosmala, general manager at ITI. "We are looking at our options: maybe we would look to raise capital on the debt market, maybe from private investors or it might be a repeated IPO."

Recently the financial markets have been contemplating an expected bond offering for ITI, which some said would be unsuccessful because ITI's outstanding €92 million (zł. 408 million) in bonds were decreasing in price.

But Kosmala said that no financial offering of any kind is definite.

He explained that the company wants cash to buy out the remaining 33-percent stake in TVN, which is owned by SBS Broadcasting. ITI has a call option which states that the company can buy the remaining stake for €110.7 million (zł. 491 million) by year-end.

Should the option expire, owing to difficulty raising capital, business would run as usual for ITI, Kosmala said. But he asserted the company would still like to have TVN fully under its umbrella, because executives believe the TV station's market share is on the up.

Analysts question the company's IPO prospects.

The company failed to raise capital on the Warsaw Stock Exchange (WSE) in July of last year, owing to a sour market, but also, according to some market watchers, to pricing disparities on the part of analysts who valuated the company. Yet, Kosmala said recent upticks in the Dow Jones Industrial Average and on the Nasdaq market, believed to be the upshot of a successful war in Iraq, bodes well for ITI financing future.

They could transfer to a more robust WSE, he said.

Analysts, on the other hand, said that among public equity investors in the country, who gave short shrift to the previous IPO attempt, ITI had some catching up to do.

"A lot of investors were very disappointed with the last IPO attempt," said one market watcher, who asked not to be identified.

Potential investors also take issue with what they say is a lack of transparency on the part of ITI and the various corporate entities in its portfolio. ITI owns stakes in the television, entertainment and new media industries, controlling such companies as TVN, ITI Cinema and Onet.

ITI seems glad to shed light on TVN's future plans, but that's not so with other companies, said Radek Solin, an analyst at BDM PKO BP.

"The company is not transparent at all," Solin added. "We don't know anything about what they are planning to do for the future. If we don't know what a company's plans are we usually advise our investors not to touch it."

Solin covers the media sector for investors, but not ITI directly, because it is not a publicly traded company.

Other analysts agreed.

"There's a bit of a lack of clarity on what the company was doing with its various cross holdings for the investors - so people were skeptical about that," said an analyst who asked not to be named.

ITI's Kosmala wholeheartedly opposes this assumption, explaining that especially recently the company has released statements on most of its entities.

ITI plans to restructure its outstanding bonds by exchanging a third of the offering with BRE Bank for a 10-percent stake in TVN and extending the 2004 maturity on the remaining debt until 2007.