Reliance Broadcast proposes capital infusion
$88 mil plan to boost CBS partner in IndiaNEW DELHI -- Reliance Broadcast Network Ltd., which recently announced an equal joint venture with CBS to launch channels in India, said Wednesday that RBNL's board of directors has approved a proposal for new capital infusion of over 4 billion rupees ($88 million) into the company, by preferential issue of equity shares to the promoter group and other investors.
"The new equity capital will substantially enhance RBNL’s net worth, and augment its borrowing capabilities, if required, thereby enabling greater participation in future growth opportunities, while enhancing overall shareholder value," RBNL said in a statement.
“The media and entertainment sector is back on an exciting double digit growth path. This resurgent market has brought with it changes in expectations from marketers and advertisers, as well as newer opportunities for media companies. The equity capital infusion is a reflection of the strong confidence of our promoter group in the future growth prospects of the company," RBNL CEO Tarun Katial added.
The new capital infusion is proposed through a preferential offer of equity shares to the promoter group and other investors. The promoter group will subscribe to approximately 29 million shares shares aggregating approximately 2.5 billion rupees, and investors approximately 19 million shares aggregating over 1.5 billion rupees. The preferential offer, which is subject to necessary approvals, will be made at a price of 85 rupees per share, reflecting a premium of over 25% to the last 26 weeks' average market price.
The proposed infusion of new equity capital is expected to increase RBNL shareholder funds by 300% from 1.67 billion rupees to 5.68 billion rupees while boosting the company's plans to bid for more FM radio station licenses in the government's upcoming third phase of radio bids, among other expansion plans.
RBNL's -- owned by DreamWorks' equal partner Reliance Anil Dhirubhai Ambani Group --recent foray into television broadcasting with CBS will first see the launch of three English entertainment channels in the fourth quarter.