The court battle for the control of Asia Television between major shareholder, local property tycoon Payson Cha and Taiwanese snack tycoon Tsai-Eng-ming continued Tuesday, with more revelations and accusations.

Now that mainland property tycoon Wang Zheng has allocated millions of dollars to buy out Asia Television, the city's first free-to-air broadcaster will find it difficult to remain in business if the transaction fails to materialize, the lawyer representing ATV (Cha), Daniel Fung, revealed.

Fung said Wang just sent a fax to his client, Payson Cha in the morning, in which Wang stated he is ready to inject HK$400 million to buy all the unsubscribed convertible bonds priced at HK$0.28 apiece.

Fung did not give further details on the shareholding transaction between Cha and Wang, which is now on hold due to the temporary injunction from court applied for by the Taiwanese snack tycoon Tsai Eng-meng.

Fung said the injunction has severely hampered the troubled broadcaster, as it is already short of cash for daily operations. For example, ATV has failed to pay HK$34 million license fees and will suffer another HK$20 million operational loss every month.

If Wang's injection deal eventually failed to close, it could force the troubled TV station into bankruptcy.

Fung rebutted Tsai's accusation that Cha tried to take advantage of the broadcaster by advancing low-priced convertible bonds and selling them to Wang at a higher price later.

He said the reason for the issuance of low priced notes is that at the time ATV was desperately in need of cash and salaries were due to be paid.

Fung denied the scheme was premeditated or intended to conceal the circumstances from Tsai.

Fung said to fulfill share-transfer obligations, Tsai needs to meet Hong Kong residency requirements, or the Broadcast Authority would never approve the purchase.

He said it is clear to both sides at the very beginning and that Tsai's allegations in court are "nothing more than imagination".

As to Tsai's argument that the existing contract granted him rights to demand Cha transfer shares to a suitable candidate nominated by himself, Fung said since Tsai is the party behind the deal, the transaction would not get approval from the authorities.

In April 2009, ATV created and issued convertible bonds due 2011 totaling HK$1 billion at the conversion price of HK$1.37.

Tsai invested approximately HK$150 million at this price.

Later on, Cha advanced a new series of convertible notes priced HK$0.28, a far cry from the initial price Tsai paid.

Tsai alleges that the low conversion price significantly diluted his shares in the broadcaster.

The Court of First Instance is expected to make a ruling by the end of next week.

China Daily

(HK Edition 04/14/2010 page2)