UTV will be cash rich by Rs 2.36 billion as a fallout of the Walt Disney deal, allowing it to pursue movie and animation businesses on a large scale.
The preferential allotment to Walt Disney of 14.9 per cent of the expanded equity capital at Rs 192.5 per share will fetch UTV an aggregate value of Rs 654.5 million ($14 million). Founder-promoter Ronnie Screwvala will contribute Rs 360 million as UTV issues him 1,949,360 warrants, which are convertible into one equity share each, at the same price.
A further $29.3 million (Rs 1.35 billion) will trickle in from Walt Disney’s buyout of Hungama TV, in a total deal size of $30.5 million with Screwvala getting $1.2 million for his 51 per cent holding in the Hindi kids channel.
“The huge cash UTV will be sitting on will help us leverage funds for future expansion of the company. Once we set out exercising the synergies with Walt Disney, we can substantially scale up the movies and animation business,” says Screwvala.
This line of optimism is making Screwvala protect his old stake in UTV. The issue of warrants will help him increase his shareholding in UTV from 42.38 per cent to 47.62 per cent before any issue of 3.4 million shares to Walt Disney. After alloting shares to Disney, Screwvala will hold around 44 per cent in UTV.
Screwvala plans to use the fresh capital to wipe out UTV’s debt of Rs 900 million. “We will become a zero debt company,” he says.
So what will the master of deals take up as his next challenge? �UTV, which is currently at the helm of affairs in its specific business segments in the Indian media and entertainment industry, is poised for its second stage of growth. As the Disney investment consummates over the next few months, post regulatory approvals, I am positive that UTV will enter a new phase of growth and strengthen its multi-revenue integrated model.�
On Screwvala’s expansion plate is not just movies and animation but also new media content including gaming. Be prepared for acquisitions in this space. And Screwvala doesn’t rule out the launch of niche channels. “We incubated and grew Vijay TV and Hungama TV before we sold out to News Corp and Walt Disney. We have the experience in the broadcasting space. With the emergence of digital platforms, there is scope to launch niche channels,” he says.