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Trade Me in halt amid reports Fairfax sells another 15% stake

Monday 18th June 2012

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Shares in Trade Me have been put on a trading halt amid reports parent Fairfax Media has sold down its holding in the online auction house by another 15 percent.

Fairfax sold a block of shares in Trade Me for some A$160 million on Sunday, according to the Australian Financial Review. The shares were sold at A$2.70 apiece, a 3.2 percent discount to their price at the close of Australian trading on Friday. That leaves just over half of Trade Me's stock in Fairfax hands.

That comes as the Wellington-based company requested the halt in the lead-up to two statements, one from itself and one from parent Fairfax.

Last week, Fairfax cut its full-year earnings guidance by 18 percent in what's shaping up to be its worst operating performance since 2008. The media company expects earnings before interest, tax, depreciation and amortisation of about A$500 million in the 12 months ended June 30, down from A$607.4 million a year earlier

Fairfax bolstered its balance sheet by spinning off a third of the shares in auction website Trade Me last year, having loaded the subsidiary with debt and extracted NZ$220 million in dividends in its last full year of ownership.

Since listing in December, Trade Me beat its pre-tax profit forecast by 2.2 percent as it attracted more sales of new goods through its platform.

Fairfax has been fighting running battles on several fronts in recent months, with its biggest shareholder Gina Rinehart pushing for two seats on the board, an Australian strike over outsourcing production to New Zealand, and speculation its plunging share price might attract a hostile takeover from a private equity player.

Trade Me shares fell 2.5 percent to $3.56 in Friday trading on the NZX, and have surged 32 percent from their sale in November. The stock is rated an average 'hold' based on a consensus of eight analysts compiled by Reuters, with a median target price of $3.75.

Fairfax shares rose 0.8 percent to 60.5 Australian cents on the ASX on Friday, having dropped 16 percent this year. The stock is rated an average 'hold' based on a consensus of 13 analysts, with a median target price of 73 Australian cents.

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