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.
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.