(Alliance News) - Matomy Media Group Ltd on Monday raised objections to a bondholder proposal which demands a USD4.5 million bond repayment within 45 days if approved.
On Tuesday last week, the media company announced that the trustee of its series A bondholders had convened a meeting for Monday this week. At the meeting, the bondholders are to vote on a resolution requiring a partial USD4.5 million early repayment which. In the absence of payment, the bondholders would then demand "immediate and full" bond repayment. The resolution only needs majority approval to pass.
Matomy has been working to sell its 90% holding in Team Internet AG to minority shareholder Rainmaker Investments GmbH for USD36 million cash in order to repay its bonds.
However, due diligence for the deal was extended twice - once to the end of July and then again for a further 45 days - due to "difficulties raised in the negotiations for the sale. This includes a claim that Matomy owes Rainmaker "an alleged debt", which Matomy disputes.
Matomy has sent a letter to the bondholder trustee, arguing against the USD4.5 million demand because it has been working on the Team Internet sale, cutting its general and administrative expenses, and collecting debt in order to "negotiate a restructuring plan between the company and its stakeholders".
"These actions have been carried out for the benefit of all the stakeholders of the company, and primarily for the benefit of the bondholders with an aim to facilitate an early repayment of the bonds," Matomy said.
Matomy expressed concern that immediate bond repayment could "materially prejudice the chances to complete" its Team Internet sale, especially the chance of selling the stake at a high enough price to repay bondholders.
According to Matomy, the uncertainty of the Team Internet sale, and the implications for its continued operations and ability to repay debt, means and early repayment could "expose the company to claims of prohibited preference of creditors", which is particularly significant given that Rainmaker believes itself to be among Matomy's creditors.
"The company rejects such claims made by Rainmaker and is of the opinion that there is no debt owed to Rainmaker under the current circumstances, but as there is a dispute with respect to this matter, the company must refrain from prepaying any amount under the bonds, as in any case of pending debt claims," Matomy said.
Should bondholders persist, Matomy said the repayment would only be made if the bondholder trustee agreed to indemnify the company and its officers for the amount of the early repayment.
In Matomy's view: "Demanding an immediate repayment would have implications not only on the negotiation for the sale of [Team Internet] shares and its terms, but also in terms of ceasing trading in the company's bonds."
Matomy has therefore required the bond trustee to make bondholders aware of the implications of the repayment resolution.
Shares in Matomy were down 3.8% at 2.55 pence on Monday in London.
