TopTV which started a major turnaround process with new interim CEO Eddie Mbalo earlier this year, says that the bottom-line of the struggling pay-TV business has improved, and that TopTV is "in the strongest position the company has been in since inception".
Yet TopTV, facing financial difficulty, now needs business rescue under section 129 of the new Companies Act to "provide a protective bubble around the company and buy it some time to complete the search for a strategic equity partner".
TopTV calls it "a precautionary measure". TopTV says the pay-TV operator will "function as normal" but refers to operating its pay-TV business as "continuing our battle".
TopTV needs more money urgently and has struggled to find a business partner willing to make a large cash injection into South Africa's second pay-TV business which started its commercial operations in May 2010.
"The business has always required a significant cash injection to recapitalise it in order to complete the turnaround and take the business to the next level of competitiveness," says Eddie Mbalo in a statement released late Wednesday night.
"The board, management and staff at TopTV are committed to the company, and we are determined to work together as a team to make it a successful business," says Eddie Mbalo.
"Good progress not withstanding, and as part of the turnaround process and good corporate governance, the board of directors of On Digital Media, the holding company of pay-TV operator TopTV, regularly assesses whether the company is in a position to meet its current obligations and those due within the nexy six months."
"Based on this ongoing assessment and precipitated by the difficulty in finding an appropriate partner, the board has prudently opted to adopt the provisions of business rescue as per the new Companies Act. This will provide a protective bubble around the company and buy it some time to complete the search for a strategic equity partner. The company will continue to function as normal," says Eddie Mbalo.
"Since the start of the turnaround programme, the bottom-line has improved and some limited funding has been sourced and injected into the business. However, the business has always required a significant cash injection to recapitalise it in order to complete the turnaround," says the company.
Now TopTV is making a public plea for a business partner - hopefully a South African one - with deep pockets. "The best source of such a cash injection would be a current industry player," says TopTV in the statement. "Such a partner would also be in a position to assist with other required strategic resources that would take time for TopTV to accumulate. Due to the competitive landscape locally and the legislative requirements that allow a foreign entity only a 20% share in ownership, the process of finding an appropriate partner has proved challenging for the start-up business."
"It is still very much business as usual at TopTV. While we are taking precautionary measures and being prudent with our current cash reserves, the board has taken this decision to ensure the long-term sustainability and growth of the company."
"TopTV has already made its mark in this space by providing healthy competition within the industry and giving consumers an alternative pay-TV experience. We further believe that this decision will cement our commitment to transparent business practices while we continue our battle on what we hope will become a more transformed landscape and a level playing field."