Investment Commission Approves Carlyle to Buy Into Eastern Multimedia

Taipei, July 7, 2006 (CENS)--The Investment Commission under the Ministry of Economic Affairs approved on July 6 the application of Carlyle Group, a private investment bank in the U.S., to spend NT$50 billion (US$1.5 billion, at US$1=NT$33) to buy into Eastern Multimedia Group (EMG), a record deal in the domestic cable TV industry.

The deal surpasses the scale of the acquisition of Taiwan Broadband Communications (TBC) by Macquarie Group of Australia at NT$30 billion early this year, and involves a more complicated arrangement.

An MOEA official revealed that the Investment Commission gave its nod of approval to the deal, despite the reservations of representatives of some government agencies, including the Government Information Office and the National Communications Commission, at the meeting that screened the case.

After realizing profits from the sale of TBC, which it acquired six years ago, Carlyle Group immediately started looking for new investment targets, and later zeroed in on Eastern Multimedia Group. The two parties reached an agreement after several months of negotiation for Carlyle to buy into subsidiaries of Eastern Multimedia Group, including a 60% stake in Eastern Multimedia Co., and 40% in Eastern Broadcasting, in addition to an option to buy a 25% stake in Eastern Home Shopping, which allows Carlyle to obtain the stake in 2008.

Of the NT$50 billion budget for the deal, US$1.5 billion will be used for acquiring Eastern Multimedia Co. and its cable-TV systems and subscribers. Eastern Multimedia now boasts 1.05 million subscribers, for whom Carlyle will pay NT$42,000 each.

Chairman Gary Wang and his family are expected to pocket NT$10 billion in profits from the deal, which will be used to build an EMG headquarters building and for investment in new projects, such as Internet TV, handset TV, and handset shopping.

Taiwan's Cable TV Broadcasting Law sets a ceiling of 60% on foreign shareholding, including direct and indirect ownership, in local cable TV operations. Carlyle will buy into Eastern Multimedia Co. via indirect, multi-layer investments, which complies with the law's stipulations.

Gary Wang pointed out that despite the investments of Carlyle, his family would still retain management of the group. EMG has the options of selling its shareholding along with Carlyle or buying back the shareholding from Carlyle, according to the company's share prices then.

The tie-up between Carlyle and EMG will further augment the role of foreign investors in Taiwan's major cable-TV multi system operators, including the 20% stake owned by Hong Kong's Star Group in China Network Systems, the largest cable-TV operator; 60% in Eastern Multimedia Co., the second-largest cable TV operator; and the 60% stake Macquarie owns in TBC.