APN discloses stock offering in bid to reduce debt levels

AUSTRALIAN MEDIA firm APN, in which Independent News & Media (IN&M) has a 39 per cent holding, has announced that it intends to raise A$99 million (€56 million) in new equity in order to reduce its debt and strengthen its balance sheet.

However, IN&M will not take part in the offering and its share in the company will dilute to 33 per cent as a result.

APN requested a halt to trading in its shares pending an announcement on its capital management plan.

IN&M tried to sell its stake last year but shelved the sale when it could not find a buyer willing to meet the required price.

In a statement to the Australian Stock Exchange, the company said that IN&M had “confirmed that it remains a long-term holder of APN, however will not be participating in the entitlement offer. APN is pleased to continue its successful association with IN&M, which goes back more than 20 years”.

The company also confirmed that it had accepted a new five-year A$54 million asset finance facility from the Commonwealth Bank of Australia.

The one-for-five rights issue at A$1 per share is at a 16 per cent discount to the company’s trading price as of May 18th. The proceeds will be used to repay some of the company’s A$911 million debt.

In a note to investors, Goodbody Stockbrokers analyst Gerry Hennigan said he estimated that INM’s net debt at the end of this year would be 5.2 times its earnings after tax and write-offs.

IN&M this week signed a six-week standstill agreement with bondholders owed €200 million by the company.

“In the circumstances and given the ongoing discussions aimed at repaying the €200 million due . . . it is hardly a surprise that IN&M is not participating in the offer,” Mr Hennigan said. – (Additional reporting: Reuters)