Television Broadcasts (0511.HK)

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Hong Kong broadcaster TVB warns it will lose HK$200 million for 2018 financial year
*The city’s most historically dominant broadcaster says loss is related to its holdings of bonds issued by mainland cinema group SMI Holdings

Louise Moon   
Published: 12:14am, 16 Mar, 2019

The parent company of Hong Kong’s oldest television station issued a profit warning on Friday, saying it expects a HK$200 million (US$25.48 million) net loss for the financial year ending December 31, 2018.

Television Broadcasts (TVB) said in a filing to the Hong Kong Stock Exchange after the close of trading it will write-off approximately HK$500 million on its holdings of SMI Bonds, issued by mainland theatre operator SMI Holdings Group.

The expected HK$200 million loss compares to a HK$243 million net profit from the prior year, TVB said.

The warning follows a round of lay-offs at the broadcaster in June, where about 100 staff were let go amid what it cited as a shift of strategy in a competitive market.

In September SMI Holdings was suspended from trading in Hong Kong over debt and management concerns, its Hong Kong shares having tumbled 39.8 per cent in the preceding 12 months.

SMI produces, distributes and licenses on-screen entertainment, and operates entertainment complexes in mainland China.

In a filing to the Hong Kong stock exchange in December, SMI Holdings said it was short of capital to maintain its business and had received letters demanding repayments of HK$400 million. The company chairman, Wai Yee-tai, and three executive directors resigned.

In the filing, SMI announced outstanding rent for its cinema sites of more than HK$200 million, and debts of 150 million yuan (US$21.7 million) for film distributors’ licensing fees.

The company said it also owed employee salaries totalling HK$108 million.

More details in https://www.scmp.com/business/companies/...llion-2018

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In hindsight, you should have returned the excess cash to shareholders.

Hong Kong television broadcaster TVB sets up task force to recover the bond default that pushed it into its first financial loss since 2008
* TVB said it has set up a task force to explore all options to recover the US$106 million lost through two bond investments in SMI Holdings
* The investments forced TVB to write off HK$500 million last year, pushing it into its first financial loss since at least 2008

Louise Moon
Published: 10:00pm, 22 May, 2019

Television Broadcasts Limited (TVB), Hong Kong’s dominant free-to-air terrestrial television provider, said it has set up a task force to recover US$106 million lost through two bond investments in SMI Holdings.

The investments in SMI’s secured and unsecured bonds ended in default, forcing TVB to make a HK$500 million write-off that pushed it into a 2018 loss of HK$199 million (US$25.3 million), its first financial loss since 2008, according to Bloomberg data. Without the impairment, TVB would have reported a 23.5 per cent earnings growth last year, from the HK$243.6 million net profit in 2017.

In hindsight, “something wrong must have occurred” with the bonds being in default, said TVB’s chief executive officer Mark Lee Po On, after the broadcaster’s annual shareholder’s meeting at its head office in Tseung Kwan O. “We could not see that in our due diligence process, so this is very unfortunate.”

TVB shares have plunged 40 per cent since August when SMI went into default, losing about HK$4.1 billion in value. The broadcaster laid off 150 staff last June, about 4 per cent of total payroll, in what TVB said was a shift of strategy in a competitive market. TVB, which began operations in 1967, was co-founded by the late movie mogul Sir Run Run Shaw.

Hong Kong-based SMI is a producer and distributor of movies and television dramas, one of the two majority shareholders of cinema operator Chengdu Runyun Culture Broadcasting.

TVB bought US$23 million of SMI’s unsecured redeemable fixed coupon bonds in April 2018, followed by US$83 million of secured redeemable convertible bonds in May, both due in 2020 with one year extensions. Four months after the investments, trading of SMI shares was halted on September 3.

The company, whose shares remain halted, has a HK$77.6 million convertible bond due on May 31. Senior executives resigned and it admitted to owing over HK$300 million in salaries and outstanding cinema rents, and 150 million yuan (US$21.7 million) for licensing fees.

“In early 2018, we had plenty of idle cash which we used to invest, or put in bank deposits,” Lee said. “It was difficult to foresee what would happen in the future, including market changes or business changes.”

https://www.scmp.com/business/companies/...cover-bond