KUALA LUMPUR: Cash-strapped Asian Broadcasting Network (M) Sdn Bhd (ABN) is looking for investors to pull it out of its financial hole.
Owing millions to contractors and service providers, the cable television station and Internet access provider has not paid staff salaries since April. Statutory payments have also been sporadic.
ABN’s largest shareholder Tan Sri K K Eswaran has been meeting creditors to seek a reprieve — he flew to India last week to meet potential investors. It is also understood that ABN is wooing some Japanese investors.
In an impassioned memo to staff on May 29, ABN president and chief executive officer Sreedhar Subramaniam asked for patience.
“Over the past two months, I have been busy with six different groups that are interested in an investment in ABN. These groups are not small players. Some are operators in other countries, and others are interested in the media and communications space,” he said in the memo sighted by The Edge Financial Daily.
“ABNXcess (ABN’s digital cable TV service) has come of age and is now the largest fixed network in the country, and we [are] drawing a lot of attention. It has been in the shareholders’ plans to involve new partners as we mature the project.
“With this happening, we can better stabilise the operations with additional resources, including synergistic working relationships.”
It is understood that ABN had to shut down its Subang Jaya customer service centre at the Taipan Business Centre, following defaults in payment to hub service providers.
Customers in Subang Jaya are now complaining that they have no Internet access on ABN, although the company's official response is that it is in the midst of relocation.
An official at the Employees Provident Fund, meanwhile, said the agency had initiated action against the company’s directors for failure to make contributions.
ABNXcess’ financial woes are a matter of public interest as the company was given a RM450 million loan from Bank Pembangunan, a government bank held by Minister of Finance Inc and the Federal Lands Commissioner.
A bailout using public money will not augur well for the present administration, which is seen as having close ties with Eswaran.
The loan, given on May 18, 2012, was meant to help fund the company’s RM2 billion capital expenditure. The loan was subject to debate in the Dewan Rakyat in 2013.
Deputy Finance Minister Datuk Ahmad Maslan said the loan was based on three criteria: intense credit and technical analysis by consultants Frost & Sullivan, the appointment of an independent checking engineer to verify the project costs, and a RM1 billion collateral by Eswaran.
Queries by the opposition lawmakers at the time included why a government bank meant to finance infrastructural projects for nation building by bumiputera companies would bankroll a digital cable television venture by someone with no expertise in it, and why Eswaran could not get a commercial bank to finance the venture. (Although company financial records showed that ABN did receive a RM15 million loan from Malayan Banking Bhd [Maybank] in 2012.)
Ahmad Maslan explained that the loan was for seven years at an interest rate of 7.8% per annum.
He told Parliament that at that time, only RM50 million had been withdrawn; to withdraw another RM150 million, ABN would have to complete cable networks for 855,000 homes.
The drawdown of the full loan will only be allowed once 1.575 million houses are wired.
ABN, launched in mid-2013, has around 50,000 subscribers. In the company’s latest financial statement, which was for financial year 2013 (FY13), accumulated losses were at RM36.2 million, including a loss of RM30.7 million for the year.
ABN has been posting zero revenue since FY09. Non-current and current assets stood at RM189.89 million and RM22.79 million, respectively, compared with non-current and current liabilities of RM102 million and RM38.82 million for FY13.
On April 6, it shut down its news division, letting go about 60 staff. Eswaran is the largest shareholder of ABN through his 70% stake in ABN Media Group — ABN’s holding company.
The rest are owned by Admiral (Rtd) Tan Sri Mohd Anwar Mohd Nor via Mutu Pedoman Sdn Bhd (10%), and former home affairs ministry secretary-general Tan Sri Mohamad Noor Abdul Rahim via Kurnia Mantap Sdn Bhd (20%).
Apart from Mohd Anwar, Mohamad Noor, Sreedhar and Eswaran’s brother K Selveswaran, other directors of the company include former Petronas Dagangan Bhd director Datuk Kamaruddin Mohd Jamal and lawyer Datuk C Vijay Kumar.
It obtained a five-year digital cable broadcast licence through Nilamas Corp Sdn Bhd, which ABN was known as then. This licence was activated in 2013, when ABNxcess went live on June 8, 2013.
It boasted of providing speeds of up to 300Mbps through its hybrid fibre-coaxial technology for its Internet service and broadcasts of over 500 channels.
It now has over 50 channels, airing mostly programmes from India and China.
This article first appeared in The Edge Financial Daily, on June 8, 2015.