ABS-CBN, TV5 forced to terminate investment deals

ABS-CBN Corporation and the MVP Group’s TV5 Network Inc. have been forced to terminate their investment agreement, including the deal involving their cable TV units, following moves by legislators and various regulators to block it.

In a disclosure to the Philippine Stock Exchange, ABS-CBN and TV5 announced that they have mutually agreed to terminate the Investment Agreement and Convertible Note Agreement signed last August 10, 2022.

The investment agreement covered the proposed acquisition by ABS-CBN of 34.99 percent equity interest in TV5. The second agreement covered the proposed subscription by ABS-CBN to a Convertible Note to be issued by TV5 which would allow it to increase its stake in TV5 to 49.92 percent.

In a separate disclosure, Sky Vision Corporation, ABS-CBN, Lopez, Inc., and Cignal Cable Corporation announced that they have mutually agreed to terminate the Sale and Purchase Agreement and Debt Instruments Agreement also signed last August 10.

The agreements covered the proposed acquisition by the MVP Group’s Cignal Cable of 38.88 percent equity interest in ABS-CBN’s Sky Cable and the proposed subscription by Cignal Cable to an Exchangeable Debt Instrument to be issued by Sky Vision and the proposed acquisition by Cignal Cable of a Convertible Note issued by Sky Cable.

The termination of both deals were formalized through separate Memoranda of Agreement. The Parties confirmed that they have not implemented any of the transactions covered by any of the agreements.

Last week, amid mounting political pressure, ABS-CBN and TV5 announced that they will delay the closing of their agreements “To address the issues which have been raised by certain legislators and the National Telecommunications Commission.”

They explained that, “This pause will give the space for both media organizations to respond to the issues, and accommodate any relevant changes to the terms.”

“Both ABS-CBN and TV5 believe that an agreement between the two media companies will have a favorable impact on Philippine media, and on free-to-air television—which remains the most affordable and extensive source of entertainment and public service to Filipinos,” the statement added.

Under their agreement ABS-CBN would have acquired 6.46 million new common shares of TV5, representing 34.99 percent of its total voting and outstanding capital stock, for P2.16 billion.

ABS-CBN would have also invested P1.84 billion in the Convertible Notes to be issued by TV5 which would allow ABS-CBN to acquire additional primary common shares of TV5 after 8 years from its issuance, increasing its equity in TV5 to no more than 49.92 percent of the outstanding capital stock of TV5.

The proceeds of the subscription in the primary common shares and the Convertible Note in the total amount of P4 billion will fund the capital expenditures and operating expenses of TV5 to enhance its content and programming and public service offerings.

Aside from this, TV5’s Cignal Cable also signed an agreement to invest in ABS-CBN’s Sky. Cignal entered into an agreement with Sky Vision, ABS-CBN, and Lopez Inc. to acquire a 38.88 percent stake in Sky Cable for P2.86 billion.