Sydney, Australia -- Australia/Pacific pay TV and
broadband-services operator Austar United Communications Ltd. plans to raise up to $A423
million ($US278 million) in an initial public offering on the Australian Stock Exchange
The offer is one of the first listings of a pay TV company
The IPO is set for July 20. The company set a range of
$A4.10 to $A4.70 ($US2.65 to $US3) per share for 90 million newly issued shares,
representing about 20 percent of the company.
About 20 percent of the shares will be available to retail
investors, with the rest being offered to institutions. Austar United parent
UnitedGlobalCom, based in Denver, will hold just under 80 percent of Austar United
following the IPO.
Austar United's businesses include 100 percent of
Australian regional pay TV operator Austar Entertainment Pty Ltd.; 50 percent of
programmer XYZ Entertainment Ltd., which provides five channels to Austar Entertainment
and cable operator Foxtel; and 65 percent of Saturn Communications Ltd., a New Zealand MSO
that provides TV, voice and data services.
Austar United has reached an agreement in principle to
increase its interest in Saturn to 100 percent in connection with the offering.
The stock sale continues UnitedGlobalCom's strategy of
"unlocking" value at its operating units, helping to boost its own share price.
In February, it sold about 38 percent of its United Pan-Europe Communications N.V. (UPC )
arm in a $1.3 billion IPO.
UPC, meanwhile, is considering an eventual IPO at its
Chello Broadband N.V. high-speed Internet provider.
Last month, Chello named Morgan Stanley Dean Witter &
Co. executive Robert Lynch as its new president and chief financial officer. Analysts
pointed to that appointment as a sign that the IPO wheels are moving.
Austar United reported consolidated revenue of $A154
million ($US101 million) for 1998, and it has projected consolidated revenues of $A285
million ($US186 million) this year.
CEO John Porter said the company's subscriber base will
grow 40 percent this year. Austar United said it has spent $A800 million ($US525 million)
building its business, and it now employs 1,000 people in 25 regional markets around the
Porter described the IPO as an opportunity for shareholders
to get on board with a major player in the Australia/Pacific broadband-communications
"We are poised on the edge of realizing some of the
potential of the broadband future. Much of the proceeds will be used to help our rollout
in Internet services, and some of it will be used in New Zealand to help our rollout into
other significant markets over there," Porter said.
"We have successfully rolled out our pay TV business.
We have a base of nearly 340,000 subscribers, and now, we are looking at introducing
high-speed Internet access through our satellite," he added.
Porter denied that the current downturn in entertainment
and media stocks here would affect Austar United's IPO, saying that the company's business
was more in line with other global media and communications companies such as UPC, British
Sky Broadcasting Group plc and EchoStar Communications Corp.
Approximately $A150 million ($US98 million) from the offer
is targeted toward developing new products and businesses including high-speed dial-up
internet services, interactive TV and resale of mobile phones.
Another $A110 million ($US72 million) is earmarked for
digital-TV set-top boxes, and about $A85 million ($US56 million) is budgeted to complete
the development of Saturn's Wellington, New Zealand, network and for any expansion.
According to Salomon Smith Barney, one of the offering's
underwriters, Austar United has "a model platform for digital-broadband
communications and interactive-services convergence," with a "portfolio of
high-growth video, voice, content and emerging data businesses that feature rapidly rising
penetration rates and substantial incremental-revenue potential."