PRAGUE, Nov 16 (Reuters) - Croatia's watchdog has rejected broadcaster Central European Media Enterprise's proposal to sell its Croatian operation to a unit of United Group, CME said on Thursday.
CME, whose main shareholder is Time Warner, said it was evaluating its options.
United Group, majority-owned by U.S. investment firm KKR, said it was assessing whether the Croatian Agency for Electronic Media's decision was "in line with the European rule of law".
CME operates television stations in six central and eastern European countries. It had planned to sell its stations in Croatia and Slovenia to United Group's Slovenia Broadband for 230 million euros ($271 million) to cover some of its longstanding debt.
It said in July that it expected to close the sale by the end of the year and intended to use the proceeds to repay a 250.8 million euro loan due in 2018.
That would have helped lower CME's $1 billion debt load and cut its average borrowing cost by 275 basis points to 4.5 percent. Most of its debt is in term loans guaranteed by Time Warner. ($1 = 0.8498 euros) (Reporting by Robert Muller; Editing by Hugh Lawson)