Cable television provider i-Cable Communications Ltd. (01097.HK), which has been suffering losses for many years, is facing questions about its survival as it could run out of cash unless it finds a new investor.
The firm is in trouble as it has failed to sell new shares to raise funds after its parent company, Wharf Holdings Ltd. (00004.HK), decided to stop additional financial support, the Hong Kong Economic Journal reports.
If the problems are not resolved, i-Cable could go out of business and it is also doubtful if Fantastic Television Ltd., an i-Cable affiliate which was awarded a free-television broadcasting license by the government last year, will be able to begin service in May as scheduled.
Wharf said Thursday that i-Cable has ended discussions about share sales with potential buyers as no agreement could be reached.
The conglomerate, meanwhile, made it clear that it will not back the loss-making unit financially anymore.
In a statement, i-Cable, which sought trading suspension in its shares on Thursday, confirmed the developments and said that Wharf has no plans to increase its stake.
The board has decided to hire an external financial consultant to explore other options, including alternative financing or business restructuring, the company said.
A three-member executive committee has been tasked to deal with the issue, according to the statement.
Amid the uncertainty, i-Cable employees are fearing for their jobs.
Wharf chairman Stephen Ng Tin-hoi, who also chairs i-Cable, told the employees Thursday to keep focusing on their work but he failed to offer assurances about what lies in store for the unit.
Questioned by the media as to what i-Cable will do next, Ng reiterated that it can only be hoped at the moment that the board comes up with an initial rescue plan with assistance from the financial consultant.
He said the board has not discussed the possibility of shutting the business after its license expires at the end of May.
He denied that Wharf has intentionally left i-Cable in the lurch without offering any help.
As for why share sales failed although several foreign investors were reported to have expressed interest, Ng did not provide a clear answer, merely saying that a lot of efforts have been made.
Wharf has been looking for a buyer for the i-Cable unit as the conglomerate wants to exit unprofitable businesses.
Amid the developments, government agencies, including the Commerce and Economic Development Bureau, said they are concerned about the situation and that they are keeping a close eye.
A spokesman for the Communications Authority said the regulator will contact Wharf and i-Cable and seek more details.
If Fantastic Television does not begin operations by May 30 as required by the license conditions, it could see its deposit money worth HK$13 million being confiscated and may also face a fine and revocation of the license.
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