Visi Media Asia (VIVA) is preparing an initial public offering (IPO) of ANTV, one of its subsidiaries. VIVA, controlled by Bakrie Group, reported strong performance in the first half of 2013, but somehow turned into loss in third quarter of 2013. As a result, VIVA, which secured US$230 million loan facilities from Credit Suisse reported 65% fall of net profit to Rp30 billion only in nine months of 2013.

As reported earlier, VIVA’s sales revenue jumped 32% in first half of 2013, stronger than both Media Nusantara Citra (MNCN) and Surya Citra Media (SCMA). Its operating profit also doubled to Rp199 billion in the period.

In third quarter of 2013, however, VIVA reported substantially slower sales revenue growth of 12.4%, while operating profit inched up 5% only to Rp126 billion. Worse, VIVA booked net loss of Rp6 billion against net profit of Rp68 billion in Q3/12.

Accordingly, VIVA booked net profit of Rp30 billion only in nine months of 2013, crashed 64.7% from the corresponding period of 2012. The net profit margin was only 2.6%, way below MNCN and SCMA.

The balance sheet?

Well, pretty much as predicted. Total assets grew 19.9% to Rp3.59 trillion, but mostly because 20.6% growth in liabilities to Rp1.59 trillion. Of course, with equity of Rp2 trillion, VIVA managed to raise more loans. As reported earlier, VIVA secured US$230 million funding from Credit Suisse in November 2013 (Q4), of which around US$80 million for refinancing of Deutsche Bank facility plus US$10.45 million of redemption premium. Still, net debt raised of US$150 million has changed VIVA’s balance sheet for the period ended December 31, 2013, right?

Redemption premium will cut further VIVA’s profit in Q4/13. At Rp12,200 per USD, the redemption premium reached Rp127.5 billion.

Going forward, the US$230 million facility carries interest rate of LIBOR + 7.75%, where first installment of US$11.5 million will due November 2014. In addition to the principal and interest amounts, VIVA must also pay a redemption premium, which is calculated using an internal rate of return (IRR) of 16% per annum if the loan is repaid in 12 months after the utilization date or 20% per annum if the loan is repaid above 12 months after the utilization date.

Erich Thohir, CEO of VIVA, said this week that ANTV will float 15% shares, proceeds of which will be used to refinance Credit Suisse facility and fund expansion of ANTV. Of course, VIVA needs to impress investors with better results in Q4/13, which might not be the case.