African pay-TV operator Econet Media has put its struggling satellite broadcasting business under administration, it says.
Quoting Econet Media CEO Joseph Hundah, Business Day said Econet, which operates under the Kwese name, plans to talk to creditors in an effort to rescue the business.
Ernst & Young has been appointed to manage the process.
Econet Media racked up more than US$130-million in external liabilities and was unable to pay suppliers before it was placed into administration earlier this week, this is according to TechCentral.
The company, which owns free-to-air and pay-television assets and which launched the Kwese Play Internet streaming service in Zimbabwe in 2017 said in a letter to creditors on 1 July that it was not able to meet its obligations to them. It is due to meet its creditors on 10 July.
The letter said Econet Media had “formed the opinion that the company is likely to become insolvent” for three reasons.
Firstly, the company is in “financial distress” and there is “material doubt” about its ability to pay its liabilities as they fall due.
Secondly, the company had accrued more than $130-million of external liabilities. “Around November 2018, management entered into settlement arrangements with most of the company’s creditors,” the letter said. “All creditors with balances of up to $100 000 were paid in full. In the most part, creditors of the company with balances of more than $100 000 were paid 15% of their balances with agreement that (1) a second instalment will be made by the company around May 2019 (25%), (2) a second instalment will be made by the company around August 2019 (25%) and (3) a final instalment will be made by the company around December 2019 (35%). The company was unable to meet the May 2019 instalment.”
The letter continued: “In the circumstances, the directors believe that it is in the best interests of the company and its creditors that (it) be placed into voluntary administration … and for an administrator to be appointed.”
Kwese TV, CEO Joseph Hundah said Kwese TV would continue to operate its free-to-air business in the rest of Africa as normal.
In March, the Independent Communications Authority of SA (Icasa) announced its decision to award the media consortium — 20% held by Econet Media, 45% by Royal Bafokeng and 35% by Mosong Capital — a licence to compete with broadcasters such as the SABC and e.tv after concluding an almost two-year process.
Kwese Free TV shareholders are Econet Group 20%, Royal Bafokeng Metix (part of Royal Bafokeng Holdings), which has a 45% stake, and Moss Mashishi’s Mosong Capital, which has a 35% stake.