A privately held Toronto company disclosed plans late Wednesday to launch a friendly $127-million (Canadian) offer to buy Standard Broadcasting, parent of Chatsworth-based Valley Cable TV Inc. At current exchange rates, the offer is worth about $91.8 million.
But another Toronto company that now controls Standard Broadcasting could be forced to buy back money-losing Valley Cable under a conditional agreement between the companies. That agreement calls on Slaight Communications to buy all 5.9 million shares of Standard Broadcasting for $21.50 (Canadian) a share.
Conditions of Agreement
Hollinger Argus, which currently controls Standard Broadcasting through its 49% interest in the Canadian media company, has agreed to sell its shares to Slaight Communications provided certain conditions are met.
Under the agreement between Slaight Communications and Hollinger Argus, 90% of Standard Broadcasting's stock must be tendered to Slaight Communications within 35 days of the launching of the tender offer. Furthermore, Slaight Communications must begin its offer by June 14 and must receive regulatory approval for the transaction within 120 days from the Canadian Radio, Television and Telecommunications Commission.
The companies did not say why Slaight Communications was granted an option that requires Hollinger Argus to buy back Valley Cable, which serves approximately 55,000 subscribers in the western portion of the San Fernando Valley and the city of San Fernando. Like most young cable ventures, Valley Cable has lost money every year since it was founded four years ago.
"I would presume they (Slaight Communications) have seen the results and wondered whether they want that (Valley Cable) to be part of what they bought," said Peter Searle, a senior vice president for finance and administration with Standard Broadcasting.
Frank McNellis, Valley Cable's general manager, said he expects Slaight Communications to force Hollinger Argus to keep the local cable company.
Standard Broadcasting officials said the proposed transactions should not affect Valley Cable subscribers. They added, however, that regulatory approval probably would be required from the Federal Communications Commission and the cities of Los Angeles and San Fernando.
The company, whose sole major U.S. holding is Valley Cable, also owns seven radio stations, one television station and cable television systems serving 45,000 subscribers in Canada.
Brothers Conrad and Montegu Black of Toronto have controlled Standard Broadcasting through their holdings in Hollinger Argus and related companies. Both brothers are directors of Standard Broadcasting, and Montegu Black serves as the company's chairman.
Their media company, Standard Broadcasting, bought Valley Cable last year for $31 million (Canadian).