UTV to return €73m in cash on completion of sale to ITV

Media group reports anticipated sale should be completed by end of March

UTV Media agreed last year to sell its two television channels UTV and UTV Ireland. Photograph: Cyril Byrne / THE IRISH TIMES

UTV Media agreed last year to sell its two television channels UTV and UTV Ireland. Photograph: Cyril Byrne / THE IRISH TIMES

 

UTV plans to return €73 million (£55 million) in cash to shareholders following the sale of its television division to ITV.

In a transaction and trading update published on Thursday, the media group said the deal was making good progress in respect of regulatory clearance and should be completed by the end of March.

It is expected to result in net cash proceeds of €130 million (£98 million) while the liability to fund the UTV pension scheme will end.

UTV Media agreed last year to sell its two television channels UTV and UTV Ireland.

In its update, the company said it planned to launch three new radio stations in the first quarter of 2016 and undertake a strategic overall review of its UK local stations.

It also reported plans to deliver double digit profit growth over the medium term while trading last year remained “in line with the board’s expectations”.

The Broadcasting Authority of Ireland (BAI) approved the sale to ITV in December and the Competition and Consumer Protection Commission (CCPC) followed suit in January. It will now be considered by the Minister for Communications, Energy and Natural Resources Alex White.

“The Group is expected to receive net cash proceeds, after transaction costs, of approximately €130 million from the sale, subject to a working capital adjustment,” the statement said.

“The board intends to repay existing bank facilities in full and has put in place new bank facilities of £30 million (€40 million) for a four-year term beginning on completion of the sale.

“The board proposes to return approximately £55 million (€73 million) (c. 57p per share) of cash to shareholders as soon as possible after completion of the sale.”

This will be delivered primarily through the issue of redeemable B shares. The proposed return of capital will require shareholder approval.

“With profitable trading divisions, reduced central costs, no defined benefit pension scheme and no significant capital expenditure requirements the historically strong cash flow generation of the business is anticipated to continue.”

UTV Ireland’s ratings and revenue performance did not meet the company’s own expectations in the first year, prompting a string of profit warnings throughout 2015.

Once the sale of the television division to ITV goes through, the remainder of UTV Media - which owns six radio stations in the Republic as well as the UK station TalkSport - will rebrand under a new name.