MONTREAL – Cogeco Cable is interested in buying into the Portuguese cable market, reports a newspaper there.
The Telecom Paper, (subscription required) a trade journal out of the Netherlands, says Portuguese business daily newspaper Jornal de Negócios reported last week that Cogeco is preparing a bid to purchase Portuguese cable operator Cabovisao.
Cabovisao, as some in the industry may know, is the primary asset of Cable Satisfaction International Inc., a cable company based in Montreal and launched by some former Videotron executives, that owned cable operations in Portugal and the Caribbean. CSII entered bankruptcy protection in 2003.
The Telecom Paper report says that Cogeco is ready to take on the debt of Cabovisao (which it said was 350 million Euros, or nearly Cdn$500 million) and pay a premium on top of that.
Cabovisao currently offers cable-TV, broadband Internet access and fixed telephony services to over 240,000 residential customers and 12,000 businesses in Portugal. Cabovisao delivers its services to customers on over 13,000 km of optical fiber and coaxial cable. The company employs more than 800 people in Portugal, distributed in 13 regional offices and has its headquarters in Palmela, according to a recent Cabovisao press release.
When asked for comment today by www.cartt.ca, Cogeco neither confirmed nor denied the report, saying in an e-mail; “It is company policy not to comment on rumours or on market speculation. In accordance with this policy, any important information concerning our company is publicly disclosed by press release, if and when appropriate.”
However, one Toronto financial analyst who covers the cable and media space – pointing to the Portuguese company’s stated debt and the $.05 share price of parent company Cable Satisfaction International Inc. – told www.cartt.ca, “The market will hate this deal if it’s true and punish (Cogeco) if they go through with it.”
Cabovisao parent company CSII is still under bankruptcy protection in Quebec and still trading on the Toronto Stock Exchange’s Venture Exchange. It’s been at either five cents or ten cents a share for a while.
The last news out of CSII came from its interim receiver RSM Richer Inc. which said on Tuesday, June 14, 2005 that the Quebec Superior Court rendered an Order extending the Stay Termination Date from June 20, 2005 to December 20, 2005 because of delays in the company’s amended plan to emerge from bankruptcy.
“The delays are principally the result of the difficulties encountered in connection with the refinancing of the existing credit facilities of CSII’s subsidiary Cabovisao-Televisao por Cabo, S.A ("Cabovisao"), which refinancing is a condition precedent to the implementation of the Amended Plan,” says that release.
“The Monitor and the Amended Plan Sponsor, Catalyst Fund Limited Partnership I ("Catalyst") are continuing their efforts to complete the refinancing in order to allow for the timely implementation of the Amended Plan.”
A call placed to RSM Richer for clarification on Monday was not returned.
CSII, which was founded by ex-Videotron vice-president and general manager Guy Laflamme, once traded at around $10 on the TSX. In January of 2000, the company sold its operations in Guadeloupe – a Caribbean island – for $36.4 million, for a profit of $25 million it said at the time.
The company then embarked on an aggressive 750 MHz build in Portugal, having gained franchises passing 1.77 million homes and after raising $600 million through share sales.
In 1999, CSII’s operating revenues doubled from $12.9 to $24 million. Earnings from operations before depreciation and amortization rose to $1.7 million as against a loss of $500,000 in 1998.
However, its last reported annual earnings, in June of 2003, showed a loss of $140 million on revenue of $180.5 million.
According to the TSX, the company now has a market cap of just over $900,000.
– Greg O’Brien
