EM.TV Says Banks Poised to Seize F1 Stake

A consortium of banks is preparing to seize a stake in the Formula One racing car business owned by German media group EM.TV & Merchandising, EM.TV said today.

The banks, BayernLB, J.P. Morgan and Lehman Brothers, formally notified EM.TV that they were entitled to a forced sale of the stake, which was pledged to them as collateral when Kirch obtained a loan from the banks last year.

EM.TV currently owns a 16.7 percent stake in the Formula One business, which is controlled by insolvent media group Kirch. It was forced to pledge its current stake to Kirch's banks when Kirch bailed out EM.TV last year prior to its own insolvency.

EM.TV said the banks' letters meant it had to consider a full write-down of the stake, currently valued at 204 million euros in its balance sheet, a move which could reduce the company's share capital by 40 percent.

"The notices are essentially preparatory measures for the execution of a pledge existing in EM.TV's share in Formula One," the company said in a statement to the German stock market.

"EM.TV disputes the effectiveness of this pledge and is determined to proceed legally against said execution," it said.