TVB nears billion-dollar buyout

Developer Yeung's financing in final stages

HONG KONG -- One of Asia's most iconic media companies, TVB, which is owned by Hong Kong's oldest media mogul, Run Run Shaw, is about to be bought for $1 billion.

Property developer Yeung Kwok-keung is reportedly close to piecing together a syndicated loan to seal a buyout of Television Broadcasts -- most famous since Shaw founded it in 1967 as host of the annual "Miss Hong Kong Contest." It's also been used as a platform for the martial arts cinema mastered by the Shaw Brothers Studios, and as one of the few channels founded under British colonial rule allowed landing rights inside China.

Yeung's $1 billion loan is being coordinated by Citibank, GE Commercial Finance, ICBC (Asia), Standard Chartered Bank (Hong Kong) and Sumitomo Mitsui, leading Hong Kong debt industry newsletter Basis Point reported Monday.

Bank representatives declined comment on the status of the loan that Basis Point said would be divided into two tranches of $850 million and $150 million.

Earlier industry reports said that Yeung also will receive a $386 million loan from Hong Kong's Henderson Land Development chairman Lee Shau-Kee.

Shaw, now 100 years old and spending his days as a philanthropist, will, for his part, extend a seller's loan of delayed payment of $257 million to Yeung so he can buy a 75% stake in Shaw Brothers -- TVB's largest shareholder with a 26% stake.

Over the years, rumors about TVB's eventual sale have come and gone, with Time Warner and News Corp. counted briefly as suitors. Reports said that Shaw was reluctant to sell TVB to foreign investors.

While Shaw's film operations faded, ceasing production in 1985 and selling its vast library in 1999, TVB remained steady, earning $167 million on revenue of $551 million last year.

Then Goldman Sachs issued a rare research report on TVB, calling it a perfect fit for a private equity investor. The company held three months of talks with Richard Li, chairman of local telecom company PCCW, and Shimao Property chairman Hui Wing-mau, but no deal was reached.

Yeung, chairman of South China-based development company Country Gardens, began raising funds for the buyout in October 2007. By May, negotiations with Shaw were put on hold when Yeung's offer failed to meet Shaw's requirement of at least $1.28 billion.

Shares have risen nearly 47% since April to $2.90 a share Tuesday.

Meanwhile, shares of separately listed TVB peaked May 19 at $6.65 a share and were back at mid-April levels on Tuesday of $5.45.

Last week, investment bank Morgan Stanley initiated coverage of TVB stock with an "overweight" recommendation and target price of $7.58 per share.
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