Photon Group wipes out debts by selling field marketing and retail division for $146.5m
Photon Group appears to have completed one of the corporate survival miracles of the decade and emerged from under its mountain of debt.
The company told the ASX this morning that it had sold its field marketing and retail sales division of $146.5m, leaving the company effectively clear of its debts.
The deal leaves Photon a much smaller company, but retaining the crown jewels of its agency portfolio including BMF, Naked Communications and BWM.
The slash-and-burn rescue by CEO Jeremy Philips has seen Photon go from a $450m debt-laden holding group of 45 disparate companies facing massive earnout commitments, to just 17 agencies but with $15m still in the bank. This will be used to cover its renegotiated earnout commitments over the next couple of years.
Philips arrived at the company 18 months ago as chairman Tim Hughes and former CEO Matt Bailey moved on. It quickly emerged that the company was in serious trouble. A recapitalisation virtually wiped out the share price.
Prior to today’s deal – with Asian private equity firm Navis Capital Partners – the company’s market capitalisation was stuck at around $66m.
In the ASX announcement, Photon said it now planned to focus on organic growth rather than acquisitions.
Companies sold include Demonstration Plus, Powerforce, Club Sales & Marketing, Ausrep, REL, Artel and Retail Insight. Craig Hart, who led the division for Photon, will become the CEO of the business under its new owner.
Photon chairman Brian Bickmore said: ‘The CEO and his management team have achieved a dramatic turnaround in the past year from the company’s previous unsustainable debt load.”
Philips said: “We have now turned Photon into an unleveraged, focused, transparent company.”
However, on its own the deal will do little to help Photon deliver bigger profits in the future. The businesses sold contributed 35% of Photon’s revenue and 39% of its profit.
Th announcement also carried an update on trading revealing that in the last quarter, Photon’s profits were down 28% compared to the same time a year before. It said that this was in part because of BWM losing the Telstra account.
We’ll have to wait to see if the phoenix can rise from the ashes but whatever way you look at it, Jeremy Philips has pulled off a Houdini act.
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Nice work Mr Philips
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Para #3 do you mean “BWM”?
AC
marketingfutures.com
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The hope now has to be that the various ‘guts and more’ founders of the high quality agency assets that remain will soon get the hard earned returns they deserve, for what they have painstakingly built!
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Although BMF are arguably good enough to be mentioned twice, I did indeed mean BWM the second time! Now sorted – ta, AC.
Cheers,
Tim – Mumbrella
The next step is surely the sale of BMF, Naked Communications and BWM.
There’s not a whole lot of value remaining in what’s left after that.
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Really not clear on photons reason for being. It’s a bit part company with no model. Let it die for gods sake.
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This chart sums up the plummet of Photon. In 2007 it was vastly overvalued
at over $125 a share. Today it has actually risen to a new recent high of 6 cents (after being at 3 cents for a while) and settled back at 5 cents a share. Surely its time to flog whats left anf shut it down!!
http://www.google.com/finance?.....;q=ASX:PGA
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Austar was 17 cents and then went to $1.80. This is an opportunity – could be any way. In the end WPP will buy the rest of the agencies. They always do.
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share price has gone up 9.6% to $0.0570….
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That is a good outcome for Photon. Well done to the $ men who pulled it off
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