CTC Media receives final payment for 75% stake sale

CTC Media has now received the received the final tranche of payment for its sale of a 75% stake in the company to Russia’s UTV Management.

The deal saw CTC Media received US$150.5 million (€133.7 million) in cash after it closed on December 23. An additional US$50 million was held back and was subject to adjustment based on the performance of the business during the second half of 2015 and agreed obligations.

In a statement issued on Friday, CTC said it has now received US$42.5 million of this additional consideration in cash.

The US$7.5 million reduction was due to several factors, including: underinvestment and deferred payments by the group in the second half of 2015 compared with the agreed target budget; a reduction in working capital compared with the agreed target, reflecting the impairment of certain older programming content; and indemnification in connection with the settlement of a commercial litigation matter, according to the firm.

The total consideration received in connection with the sale was US$193.1 million.

“The management team achieved solid operating results in the second half of 2015 in a challenging and deteriorating market environment in Russia. Against this macroeconomic backdrop, this performance helped to limit the reduction in the purchase price,” said Werner Klatten, chairman of the special committee of the board of CTC Media.

The takeover was agreed last year in order to bring CTC Media into compliance with the foreign ownership restrictions of the Russian Mass Media Law.

Russian president Vladimir Putin signed an amendment to the Russian law on mass media at the end of last year that will limit foreign ownership of media companies in Russia to 20%, down from the current limit of 50%. This will apply to both existing and future foreign ownership and comes into effect on January 1, 2016.