JANUARY 30, 2002
Kirch in crisis as Springer exercises put option
KIRCH, the company which controls the commercial rights of Formula 1 racing, is facing a financial crisis after German publishing house Axel Springer exercised a "put" option, forcing Kirch Media to buy its stake in ProSiebenSAT1 for $675m. Kirch is currently in considerable debt and cannot raise the money to pay Springer and is now hoping to convince the company to delay the option. Rumor suggest that as part of the deal Kirch will have to agree to hand over a share of Kirch Media if he fails to make the payments.
At the same time Kirch is reported to be getting ready to hand over a majority shareholding in its pay-TV station Premiere to Rupert Murdoch's News Corporation to avoid another put option which Kirch needs to honor in October. Murdoch has a deal to sell his 22% share in Premiere to Kirch for $1.4bn.
Kirch is estimated to have around $5bn in debts already and is having trouble borrowing more money. The company is already under pressure to repay Dresdner Bank a loan of $440m.
If the crisis continues it is possible that Kirch may be forced to sell off some of its other assets (including F1) to stay in business.
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