Deutsche Bank May Have Lost Money on EM.TV

Deutsche Bank AG on Wednesday declined to comment on media reports that one of the investment funds it manages had taken a big paper loss on a stake in ailing German media company EM.TV AG.

Deutsche said the fund, Deutsche European Partners IV LP, run by UK unit Morgan Grenfell Private Equity, had obtained $450 million worth of EM.TV shares in March in exchange for a 12.5 percent stake in SLEC, the holding company for Formula One motor racing.

EM.TV shares were trading above 100 euros in March and have since slumped to less than 10 euros after EM.TV said its earnings would fall well short of its targets this year.

A Deutsche Bank spokesman said any losses at the fund would not hit Deutsche's results, but would affect the investors in the fund. Deutsche European Partners is held by institutional investors.

"Deutsche Bank holds no direct stake in EM.TV," the spokesman said.

Media reports have put the paper loss at between $275 and more than $400 million. The spokesman declined to comment on whether the fund still holds all the EM.TV shares it obtained in March or has since sold some of them.

Graham Hutton, chief executive of Morgan Grenfell Private Equity, was not available for comment. "Mr Hutton will not be free for comment on that," a company secretary said.

Deutsche Bank said Deutsche European Partners bought the stake in SLEC on December 17 last year for $275 million and sold it to EM.TV in March this year for $450 million in EM.TV stock.

EM.TV has suffered a slump in its share price which has dented investor confidence in the Neuer Markt exchange for growth stocks.

Last Friday the company slashed its 2000 forecast for earnings before interest and tax to 50 million marks from a previous forecast of 525 million.

EM.TV has so far failed to provide detailed information on the source of its problems, but has said that it amassed debt of 2.2 billion marks after a buying spree including Jim Henson Company, the producer of the Muppets, and a 50 percent stake in SLEC.

EM.TV bought the SLEC stake from the Deutsche Bank fund and from U.S. investment company Hellman & Friedman, which sold EM.TV 37.5 percent of SLEC.

Under a deal announced on Monday, media group Kirch has agreed to take a stake in EM.TV and buy half the 50 percent stake in SLEC for $550 million.

Monday's deal failed to stem the decline in EM.TV shares, which were trading at 7.05 euros at 1235 GMT on Wednesday, down 19.9 percent from Tuesday's close.