Friday 27th February 2009 |
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The three-for-five entitlement offer is at 75 cents a share, 13% below their trading price before being halted yesterday. The shares were last at 93 cents. Proceeds would be used to reduce net debt to about A$2.1 billion from A$2.5 billion, giving it more "headroom" under bank covenants, it said in a statement.
If shareholders take up 100% of the offer, net debt to EBITDA will reduce to 2.4 times from 3.2 times, against the covenant maximum of 4 times. The EBITDA to net interest ratio would rise to 4.5 times from 3.9 times, against a covenant minimum of 3.25 times, according to the statement.
"In these extremely unstable times our shareholders are supportive of improving our balance sheet position," chairman Ron Walker said.
The publisher of the Sydney Morning Herald this week posted a first-half loss of A$365 million as advertising revenue dwindled and the publisher wrote down the value of its mastheads and media licenses. Sales rose 0.5% to A$1.45 billion.
Shares of the Sydney-based company have tumbled 77% in the past 12 months. The company this week cut its dividend to 2 cents from 10 cents and suspended its dividend reinvestment plan.
The outlook for the rest of the year may be just as grim. The company said trading conditions have weakened in January and February and classified advertising is expected to remain weak for the rest of the financial year.
The company took a A$447.5 million impairment charge against its mastheads, licenses and goodwill.
Fairfax today named Brian Cassill as chief financial officer, replacing Sankar Narayan.
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