Examiner appointed at Celtic Vision as losses reach £3.7m

AN interim examiner was appointed by the High Court yesterday to CelticVision, a cable television company which broadcasts an…

AN interim examiner was appointed by the High Court yesterday to CelticVision, a cable television company which broadcasts an Irish cable channel in the United States. The company has accumulated £3.7 million in losses

Mr Justice McCracken appointed Mr Jason Sheehy of CooneyCarey accountants, as interim examiner to CelticVision Productions Ltd, BDO Simpson Xavier, Simpson Xavier Court, Merchants Quay, Dublin.

Mr Charles Meehan, counsel for the petitioners who are directors of the company, said there was an identifiable possibility that the company could survive as a going concern. The petition had the support of the company's only secured creditor.

The petition states that the company since its incorporation in July 1991 had accumulated losses of approximately £3.7 million. The company continued to make losses at the rate of £47,000 a month. These losses were being incurred not withstanding that 12 of the company's employees in Ireland and 10 in the US had been placed on temporary lay off.

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The company purchased programmes principally from RTE but also BBC and independent producers for the purposes of rebroadcast on a cable network. The company in the US was a television channel in its own right. Viewers of the channel paid a fee through the cable network in the US and CelticVision received 35 per cent of this.

In February 1993, the company obtained approval in principal from Cablevision Systems plc, the fifth largest cable television distributor in the US, for broadcast of the company's programmes on Cablevision's Boston/Brookline system which has 132,000 subscriber householders in the Boston area.

In 1993, $120,000 was raised in share capital from private individuals from Ireland and the US. In July/August 1994, the company secured the rights to BBC rebroadcasting and the exclusive rights to distribute all RTE programming in the US and Canada for a period of three years. Between October 1994 and March 1995, the company raised further capital of $154,000. This enabled the CelticVision to commence acquiring programming. On March 17th, 1995, the company began broadcasting on a 24 hourly basis comprising of 12 hours of actual programmes and 12 hours of information services.

However, the company was obliged to commence business before it was fully financially able to do so. It was obliged to launch on March 17th without full financing being in place because there was no certainty that a later launch opportunity would be provided by Cablevision Systems and the company believed another substantial US group was offering RTE some millions of dollars for the same rights in the US.

The company did not meet its initial revenue projections due to lower initial advertising revenue and subscription sales. Although by the end of August 1995 the company had raised further substantial sums of money, there were serious operating losses.

The company entered into an agreement with Donegal Ventures, an incorporated company set up by a group of businessmen, which became, on an exclusive basis, the company's new "managing investor" and a secured creditor Donegal Ventures was willing to invest 5500,000 during the period of the examinership.

The statement of assets and liabilities showed a deficit of £3.1 million. The company had only been able to continue to operate because of the continued support it had received from its major creditors RTE, Temple Lane Recording Studios, Aresty International Law Offices, Sound House Ltd and Cablevision Systems Inc.

Mr Justice McCracken said there was certainly a reasonable possibility of the survival of the company which was influenced as much as anything else by the support given by RTE and other creditors. He made it returnable for July 15th.