Thursday 16th June 2016
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APN News & Media's 6,933 shareholders will today vote on whether to carve out NZME as a standalone business, leaving with stock in separate media companies on each side of the Tasman.
The company is holding a special meeting in its base of Sydney today asking investors to vote on a demerger of the New Zealand publisher and radio operator. The transaction would see a one-for-seven share consolidation in the Australian company, then a distribution of NZME shares to those investors on a one-for-one basis. The deal then frees up APN to focus on Australian radio and outside advertising business, while NZME can pursue its merger with rival Fairfax New Zealand.
Chairman Peter Cosgrove said the board also considered keeping the status quo, selling NZME or floating the New Zealand business before deciding the demerger would create the most value for shareholders.
"The demerger gives both APN and NZME flexibility to pay dividends within the next 12 months," Cosgrove said in speech notes published on the NZX ahead of the meeting.
APN intends to pay dividends at a ratio of 40-to-60 percent of underlying net profit, while NZME's ratio is expected to be 60-to-80 percent.
"It is proposed that NZME's first dividend will be considered for the six month period to 30 June 2016," he said.
NZME and Fairfax Media's New Zealand unit have filed an application with the Commerce Commission to merge their businesses, which they claim is needed to fend off global digital advertising giants such as Google and Facebook. The regulator has since said it will look at whether there are separate print and digital markets for both readers and advertisers and if other online offerings are real competitors to New Zealand's stuff.co.nz and nzherald.co.nz websites.
APN chief executive Ciaran Davis said NZME has exceeded earnings before interest, tax, depreciation and amortisation targets, which was $67.5 million in 2015 on revenue of $433 million.
The demerger gives the group flexibility to invest in the entities separately, "allowing them to succeed in their individual markets," Davis said.
APN shares were unchanged at 68 cents on the NZX and last traded at 64 Australian cents on the ASX.
The meeting was scheduled to start at 11am New Zealand time.
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