UTV's Disney deal to fund next stage of growth: Ronnie Screwvala
27 July 2006
The company's management reveals that it will be raising Rs200 crore from the stake sale.
Further, it is looking at consolidating operations with Walt Disney over the next three months and is also looking at building a war chest for M&As. CNBC-TV18 shares with domain-b excerpts of its exclusive interview with Screwvala, founder promoter, UTV:
Why the decision to get out of Hungama and sell it to Walt Disney?
We have been exploring a strategic relationship with these people over the last three months and then we finally started negotiating with Walt Disney for a broader alliance.
In that alliance we need to look for a broader framework. From Hungama's point of view we brought it to a leadership status for it to go to the next level growth. That's the sort of deal we worked out with Walt Disney, and part of that process is an overall investment and their investment of 14.9 per cent at UTV reflects, their commitments, our commitments and keeping space.
The 'keep space' overall for us is a combination of animation, movies and TV content and broadcasting. Going forward looking at this alliance, we see ourselves moving to new levels in movies and content production.
You are going to get quite a bit of cash into the company right now after this deal for Rs 70 crore from the sale of the Hungama subsidiary. Rs65 crore is what Walt Disney is putting in, and you will put in some through warrants as well? What do you need and how do you wish to deploy this cash?
The total sales transaction is around Rs200 crore from the fresh equity as well as the sale of Hungama. Outside of partly retiring debt, our strategic initiatives are primarily in movies, new media, animation, most of our content activities and scaling them up. We are also building a war chest to look at some M&A, but it is too early to talk about that.