Art Basel’s parent company is urging shareholders to accept James Murdoch’s rescue package.
2019’s Art Basel in Basel. Courtesy Art Basel.
The board of directors of Art Basel’s parent company, MCH Group, is urging shareholders to accept a restructuring package that includes a major cash infusion from the investment company of James Murdoch, media billionaire Rupert Murdoch’s younger son. In a letter to shareholders posted on Saturday, MCH Group’s board described the company’s current position as “extremely precarious”; it has been forced to cancel physical editions of two consecutive Art Basel fairs (in Hong Kong and Basel), as well as other major moneymakers like its watch fair Baselworld, due to COVID-19. The company is projecting a drop in sales of as much as 170 million Swiss francs ($181 million) in 2020, according to a Bloomberg report.
The board of directors’ letter underlined the urgency of approving the package including Murdoch’s support at a shareholders’ meeting scheduled for August 3rd:
If this overall package were to fail, extremely little time would be left for developing and implementing alternative restructuring solutions before it was too late. [...] Financial restructuring measures are now indispensable to secure the group’s survival. The proposed two-stage capital increase makes it possible to inject fresh capital into the company without proceeding to a capital cut or an emergency sale of parts of the company’s assets, which would be painful for all shareholders.
Under the terms of the proposal from Murdoch’s investment company, Lupa Systems, it would acquire a stake of 30 to 44 percent. Murdoch would also join MCH Group’s board of directors.
The board letter also alludes to a full takeover bid by a group of investors, which would have proceeded to sell off parts of MCH Group’s portfolio like Art Basel.