TKP breaches loan agreement
TKP breached covenants relating to EBITDA (earnings before interest, taxes, depreciation and amortization) and subscriber levels for the DM 129.4 million facility, according to the offering prospectus for Agora, which has a 20% stake in the company. (See related story, page 18)
As a result of the breach, TKP is not allowed to draw on the credit line, which was granted last February by a consortium of Banque Paribas and Societe Generale. About DM 100 million of the facility is outstanding. The credit line is secured by the TKP shares held by Agora, although the company in 1998 wrote off the value of its investment.
According to Agora's prospectus, the two banks have waived TKP's breaches until the end of next month and the terms of financing for the facility are currently being renegotiated.
Officials with TKP and Canal+ were not available for comment last week on the problem or the negotiations.
TKP's financial situation has continued to deteriorate as it rolls out its costly digital platform, which is in direct competition with Wizja TV owned by @Entertainment. During the first nine months of 1998, TKP posted unaudited consolidated net losses of zl. 132.8 million ($38 million), Agora's prospectus said. It did not detail full-year losses, but said that "TKP's losses increased in the fourth quarter of 1998 due to increased investment in the new digital platform and a significant slowing down of new subscribers to its analog pay-TV service."
As a result of TKP's financial underperformance, Agora said it would not provide any additional financing for the television station. In the second half of last year, TKP's losses were funded by loans from other shareholders, Canal+ and PolCom Invest. These loans can be converted into shares by March 31, 1999, which is likely to occur. This would further dilute Agora's stake in the company.
"We will support operations of all our businesses, but we are not able and we will not pour additional financing into (TKP)," Piotr Niemczycki, deputy president of Agora's managing board, said.
