SYDNEY, December 22, 2002 -- Australian private-equity investment firm Castle Harlan Australian Mezzanine Partners Pty. Ltd. (CHAMP) announced that it is sponsoring, on behalf of the CHAMP I funds, a plan of reorganization for United Australia Pacific, Inc. (UAP), which was filed Saturday in U.S. Bankruptcy Court in New York. If approved, the plan would make CHAMP beneficially the largest shareholder in publicly traded Austar United Communications Ltd. (Austar) (ASX:AUN.AX).
Austar is the only provider of satellite pay TV in non-urban Australia, with more than 400,000 subscribers, and has exclusive pay television rights in all but the major Australian cities (i.e. excluding Sydney, Melbourne, Adelaide, Brisbane and Perth, in addition to all of the sparsely settled state of Western Australia). Austar reported A$241.0 million in revenue for the nine months ended September 30, 2002.
Under the plan, CHAMP is offering US$34.5 million (approximately A$61 million) for UAP's majority interest in United Austar, Inc. (a Colorado company that beneficially owns 80.7 percent of Austar). The offer represents approximately seven percent of the face value of UAP's outstanding bonds.
The plan has been recommended by the UAP secured creditors' committee. It is expected that a creditors' vote on the plan will occur in late February 2003. The plan's acceptance is subject to approval by Australia's Foreign Investment Review Board and by Austar's bank lenders.
"Assuming the UAP plan is approved, CHAMP and UnitedGlobalCom, Inc. (Nasdaq: UCOMA), a publicly traded U.S. firm and the other major beneficial shareholder in Austar, will then together beneficially own 80.7 percent of Austar. The balance of Austar will still be owned by the public," CHAMP Chairman Bill Ferris said.
Following acceptance of the UAP plan of reorganization, CHAMP will appoint representatives to the Austar board. John Porter will continue as Austar's chief executive officer.
As a condition of its approval for the transaction, the Australian Securities and Investments Commission has required that, following approval of the UAP plan, probably in early March 2003, CHAMP make a follow-on offer for the remainder of Austar that is publicly owned. The follow-on offer price will be equivalent to the price CHAMP will have paid to UAP bondholders for the Austar shares they control. At today's exchange rate, that price would be A$0.17 per share.
After completion of the follow-on offer to shareholders, CHAMP and UnitedGlobalCom will fully underwrite an Austar equity rights issue of A$63.5 million, also priced at the follow-on price referred to above. Austar will use the proceeds for working capital.
CHAMP manages and advises more than A$830 million in private-equity capital in several funds available for investment in LBO's, growth and development opportunities and venture capital in Australia, New Zealand and the broader Australasian region. The CHAMP I Funds have approximately A$550 million for investment in larger buyouts.
CHAMP is one of Australia's oldest and most successful private-equity firms. It is 50 percent owned by Castle Harlan, Inc., the New York merchant bank, and 50 percent by the founders of CHAMP's predecessor firm.
Since the final closing of the CHAMP I Funds in mid-2000, its Australian acquisitions have included Australian Pacific Paper Products, a leading Australian maker of diapers and adult incontinence products; Penrice Soda Products, the only Australian manufacturer of soda ash and sodium bicarbonate; Sheridan Australia, the leading Australian manufacturer, designer and marketer of bed and bath linens; and Bradken, Australia's leading manufacturer of ground-engaging tools used by the mining and construction sectors and also Australia's largest producer of bogey systems for railway freight cars.
Castle Harlan was founded in 1987 by John K. Castle, former president and chief executive officer of Donaldson, Lufkin & Jenrette, the investment banking firm, and Leonard M. Harlan, founder and former chairman of The Harlan Company.
Since its inception, Castle Harlan has completed acquisitions exceeding US$5 billion. It is currently raising its fourth investment fund, targeted at US$1.25 billion.