APN shares halted for potential material announcement on NZME

Monday 9th May 2016

APN News & Media, which abandoned plans for an initial public offering of its NZME division in February, had its shares halted on the ASX pending an announcement about a potential material transaction involving the New Zealand assets.

The trading halt will remain in place until the start of trading on May 11, the date of its annual meeting unless APN requests it to be lifted sooner, the company said. The Australian newspaper has reported that APN could spin off NZME as a separately listed company through a distribution of NZME shares to its shareholders.

The News Corp-owned newspaper also said APN had held talks with Fairfax Media, which is also considering options for its New Zealand business, speculating both could spin-off their local assets as a precursor to a merger. It would raise at least A$200 million, probably via a rights issue, allowing the company to pay down debt that stood at A$456 million at the end of December, or 2.74 times earnings before interest, tax, depreciation and amortisation.

NZME's assets include the flagship New Zealand Herald newspaper and Newstalk ZB, the country's No. 1 radio station. Sales fell 3 percent to $433 million in 2015, which it said reflected a tough advertising market and soft New Zealand economy. Earnings before interest, tax, depreciation and amortisation fell 8 percent to about $75 million.

Of NZME's 2015 revenue, 68 percent came from publishing and 28 percent from its radio assets. The GrabOne daily deals website generated about 4 percent of sales.

NZME also merged its three business into one, with a common newsroom and combined commercial teams and shifted its headquarters, achieving cost savings of A$20 million. The business was reorganised into content 'verticals' - news, sport and entertainment.

APN's notice of meeting for the May 11 AGM makes no mention of the New Zealand business. The meeting is being held on Wednesday in Sydney at 9:30am local time. In its 2015 shareholder review, APN said NZME's focus for 2016 would be "to continue to explore new partnership ventures and continue to position the business as the leading media and entertainment business in New Zealand."

BusinessDesk.co.nz

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