Wed, May 09, 2018 - Page 3 News List

CNS shareholder change request not submitted: NCC

By Shelley Shan  /  Staff reporter

The National Communications Commission (NCC) yesterday said that it has yet to receive an application from the multiple system operator China Network Systems (CNS) to change shareholders, and would review the case based on media regulations.

The commission made the statement after the Ministry of Economic Affairs’ Investment Commission confirmed that it had on Monday received a sale approval application from MBK Partners, CNS’ largest shareholder, to sell CNS to KHL Capital chairman Gary Kuo (郭冠群).

KHL Capital is one of the nation’s largest private equity firms.

“We will closely examine the change in CNS’ investment structure if the deal is approved, in addition to sources of funding for the acquisition,” NCC spokesperson Wong Po-tsung (翁柏宗) said. “We will also be holding at least one administrative hearing and one public hearing over the transaction, as we normally do with sales involving media outlets.”

This would be the fourth time MBK has attempted to sell CNS. Other potential buyers of CNS included Want Want China Times Group from 2011 to 2013, Ting Hsin International Group from 2014 to 2015 and Morgan Stanley from 2015 to last year.

As the transaction involves MBK, an overseas private equity firm, exiting through a sale of a Taiwanese multiple system operator, the deal would need approval from the Investment Commission, the NCC and other agencies.

Apart from Kuo, Lin Hung-nan (林鴻南), who is expected to take over the helm of Hong Tai Group, was reported to have helped fund the purchase of CNS.

Hong Tai Group was founded by real-estate tycoon Lin Yu-lin (林堉璘), the second brother of late Liberty Times founder Lin Rung San (林榮三), while Kuo had held management positions in Morgan Stanley and financial holding firms before founding KHL Capital.

The application submitted to the Investment Commission listed Kuo as the buyers’ representative, but more than half of the funding needed to acquire CNS would reportedly be provided by Lin Hung-nan.

Market analysts estimate that the buyers would have no trouble securing bank loans to fund the acquisition, which could cost NT$58 billion (US$1.95 billion).

To follow regulations that ban political parties, the government, the military and Chinese from investing in local media, both Kuo and Lin Hung-nan were reported to have bought CNS on their own.

The NCC in 2012 approved Want Want China Times Group’s purchase of CNS, provided that the group adheres to the condition that the deal would not lead to further concentration of media ownership.

The approval was annulled in 2013 after Want Want failed to meet the condition.

In January 2016, the NCC granted Morgan Stanley approval to buy CNS, as long as the investment firm agreed to follow certain conditions.

However, the NCC in May 2016 decided to investigate the case due to an indirect investment from Far EasTone Telecommunications in the deal, a move that was deemed by new NCC commissioners to circumvent the regulations banning certain investments in media outlets, as four major government funds invest in the telecom.

CNS and Morgan Stanley withdrew their applications last year before the NCC issued a ruling.

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