Ooh Media enters trading halt as it considers capital raising
Outdoor media company Ooh Media has entered a trading halt and is considering capital raising.
An Ooh Media spokesperson told Mumbrella the company does not have liquidity issues, but it is facing uncertainty in the near term due to the unprecedented market conditions caused by COVID-19 (coronavirus)
Ooh Media has entered a trading halt
The decision comes as the out of home sector faces uncertainty with more people staying at home and less eyes on outdoor media. The emergency funds raised by the business will be focused on it not breaching its debt covenants, which currently sit at 2.6 times earnings before interest, taxes, depreciation, and amortisation (EBITDA).
“The trading halt reflects discussions we are having with our major shareholders. Given the recent share price decline, we think this is prudent, the company does not have liquidity issues. Ooh enjoys long-term supportive relationships with our banking syndicate and the facilities do not expire until 2021.
“Short-term this is all about talking to the shareholders, managing capex and implementing cost-control measures,” an Ooh Media spokesperson told Mumbrella, noting capital raising was one option, but not the only option.
“First-quarter trading is in line with guidance, however near term visibility is uncertain given the unprecedented market conditions we’re in. For us, it’s about how we make sure we’re managing the short-term volatility, while ensuring the business is well placed to leverage the opportunity when the market stabilises and recovers. And they will recover.”
The spokesperson also insisted the out-of-home sector had a bright future, despite the immense challenges facing businesses around the world.
“So the long-term fundamentals for out of home are still positive. There’s no doubt that like the rest of the world and companies in every sector, out of home is undoubtedly being impacted by coronavirus. So what we’re seeing is a change in how advertisers are using out of home. Audiences are still around. So while they are maybe not travelling to the office or flying domestically or internationally, they’re still out and about, they’re still going to local shops, they’re still going out for exercise. So they are moving around more locally, and our network is local media. So brands still need to have a presence to make sure they emerge as strong or stronger when we come out of this challenging time,” the spokesperson said.
The spokesperson also claimed less than 3% of Ooh Media’s revenue was sourced from “travel-related areas”.
Prior to the coronavirus outbreak, Ooh Media issued a guidance of $140-$155m in 2020 calendar year earnings.
Earlier this week the business withdrew that guidance, blaming the current coronavirus (COVID-19) outbreak and the inability to predict the coming circumstances and their impact on the ad market.
In February, the business lodged its results for the 2019 calendar year with a 23% drop in profits, but reported a slightly improved second half of the year, which put it in a hopeful position for 2020.
Normal trading will commence for the business either on, or before, March 24.
Sorry, we don’t have liquidity issues, except that we need an emergency capital raising so we don’t breach our debt covenants? That’s a pretty silly thing to fly up the pole. Sure, they need some help for an extraordinary event and you feel for them and all there, but is that how you manage a crisis?
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Yikes, their share price was a recommended share option in this climate by ComSec only last week!
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